Last week, the stock market saw continued swings, with daily doji sell signals on Tuesday shifting the momentum to negative leading into Wednesday. Despite a brief surge following the FOMC announcement on Wednesday afternoon, stocks dropped sharply into the close, likely encouraged by the largest monthly decline of the year in April. The Consumer Confidence index also came in weaker than expected, further impacting market sentiment.
Despite the bearish backdrop, new buying emerged towards the end of the week as advancing issues on the NYSE outpaced declining issues at a 3-1 margin on both Thursday and Friday. Weaker-than-expected jobs reports and positive earnings from Apple helped fuel a more positive outlook. The Dow Jones Utility Average led the week with a gain of 3.4%, outpacing other indices.
While the Nasdaq 100 managed to gain 1% for the week, the S&P 500 led on a year-to-date basis. The SPDR Gold Shares saw a slight decline of 1.7% but were still up 11.4% year-to-date. The market action seemed to suggest a reversal in sentiment, with a more positive close convincing many bearish investors to modify their outlook. Technical indicators also hinted at a potential end to the correction and a resumption of the uptrend from October 2023 lows.
The weekly charts of the S&P 500 and NYSE Stocks Only Advance/Decline lines showed a positive trend, with the break of downtrends and positive formations indicating a potential transition where growth leads again. While the Invesco QQQ Trust showed improvement, the SPY continued to act stronger. More positive readings in the daily A/D lines are needed to confirm a trend higher, despite a rise in bullish sentiment among investors.
The dynamic Trailing Stop (DTS) analysis identified new market leaders early, with significant improvement in the NQs Largest Gauge. Bullish signals were seen for Apple and Amazon, with the overall reading for the group increasing. Monitoring sector ETFs for signs of completed corrections and using stops to manage risk are crucial factors to consider for investors in the current market environment.
