Weekly Wisdom: NVDA Beats Again; New Highs Rejected

Greetings fellow traders and welcome to your May 23rd edition of Weekly Wisdom: Levels to Know and Moves to Look For!

Now let’s get to what we’re currently seeing in these volatile markets and what we have our focus on going forward.

Taking a look back on this week, May 20 – May 24:

• Markets made another new all time high this week with the help of yet another earnings beat from $NVDA. 
• $SPX futures traded to a new all time high of 5368 Thursday morning but has since traded back down to 5300 on the post $NVDA earnings session.  
• Monday started the week off slowly with no new economic data hitting the wires. There were multiple Fed speakers throughout the day and week, with most giving hawkish tones to their speeches, emphasizing the need to wait for confirming data to start cutting rates.  
• Tuesday began with Canada reporting in-line numbers for their latest CPI report. More Fed members spoke throughout the day and emphasized the same message.  
• Wednesday brought an update for existing home sales which was a miss at 4.14 million vs 4.21 million expected. FOMC meeting minutes hit in the afternoon, again with a more hawkish tone, emphasizing the need for confirming data that inflation is coming down further before beginning rate cuts.  
• Traders, for now, are expecting either November or December as the first rate cut.  
• Thursday brought us our weekly unemployment claims which was a beat at 215,000 vs 220,000 expected. Later in the morning we got an update for flash manufacturing PMI which was a beat at 50.9 vs 50.0 expected. We also got a beat for flash services PMI at 54.8 vs 51.2 expected. We then saw a miss for new home sales at 634,000 vs 677,000 expected.  
• Friday, May 24 ends the week with durable goods orders m/m and core durable goods orders m/m at 8:30 a.m. ET. Revised University of Michigan consumer sentiment and inflation expectations are then reported at 10:00 a.m. ET.

Here’s what we are eyeing next week, May 27 – May 31:

Level Highlights:

• $SPX futures chopped between 5300 and 5350 for the past week as market participants awaited both the FOMC meeting minutes on Wednesday afternoon and $NVDA earnings report after Wednesday’s close.  
• Following $NVDA’s earnings beat, $SPX futures broke out over 5350 which should give it a measured move to 5400 based on the prior week’s range.  
• However, Thursday’s post earnings session has consisted of selling across the board in nearly everything besides $NVDA itself, which may be catching market participants off guard.  
• A close below 5300 in $SPX futures will likely take momentum away from the bulls.
• A close below 5250 will negate the recent breakout and will put bears more in control.  
• Should this be the start of a bigger sell, the 5200-5150 zone is a solid support zone for the bulls to attempt to bounce off of. 
• $VVIX has been diverging from the $VIX lately, as pointed out last week with the break and snap back over the 75 level.  
• Bulls should be careful and take caution if the $VVIX breaks up over the 85 level, as well as if the $VIX gets back over the 14 level.

Upcoming News:

• Monday, May 27 markets are closed for Memorial Day.
• Tuesday, May 28 more FOMC members will share their wonderful opinions. We’ll also see an update for CB consumer confidence at 10:00 a.m. ET.  
• Wednesday, May 29 brings us date for the Richmond Manufacturing Index at 10:00 a.m. ET. We’ll then see the update for the Fed Beige Book at 2:00 p.m. ET.  
• Thursday, May 30 starts off with our weekly unemployment claims, as well as an update for prelim GDP q/q, prelim GDP price index q/q, the goods trade balance, and prelim wholesale inventories m/m all at 8:30 a.m. ET. We’ll then see pending home sales m/m at 10:00 a.m. ET.  
• Friday, May 31 ends the week with core PCE price index m/m, personal income m/m, and personal spending m/m at 8:30 a.m. ET. We’ll then see Chicago PMI at 9:45 a.m. ET. We’ll tentatively get an update for the Treasury currency report at some point in the afternoon, with past reportings being released around 3:00 p.m. ET.  

Here’s Your Chart of the Week:

Via Citigroup:  US data, along with the rest of the world, has taken a downturn this Spring, with more data points coming in at negative surprises, just as many are wondering if the Fed will end up cutting interest rates this year at all.

Source

SPY Daily Update:

$SPY daily chart is seeing an ugly reject following $NVDA’s earnings beat, giving traders a day to take notice of. Support below can be found at 525, 521, and 517.

SPY Weekly Update:

$SPY now red on the week after the rejection at new all time highs, but this is after a large 5 week run higher. Big picture, bears will take back full control on a close back under 520. 

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-Patrick Hawe

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Patrick Hawe’s current positions:

*As of 2:31pm ET May 23, 2024

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