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SYS Daily Report – Weekend Edition
Stocks Dive Amidst Inflation and Geopolitical Uncertainty
The stock market witnessed a rollercoaster ride this week, reacting to a fiery Consumer Price Index (CPI) report and escalating tensions in the Middle East. However, the week concluded on a somber note, with a bearish tone prevailing as stocks saw a significant downturn, erasing any optimism garnered from Thursday’s brief bullish signals.
Pundits attribute this downturn to mounting fears of potential Iranian aggression against Israel and lackluster bank earnings. Yet, from a technical standpoint, the weekly PPO momentum indicators have suggested an impending bout of volatility on the downside for some time now. While media narratives often attempt to simplify market movements, sometimes, the technical aspects truly dictate trends.
Nasdaq – Weekly Chart
As the adage goes, “a market top is a process, whereas a market bottom is an event.” This could very well be the process we’re currently witnessing. However, before completely capitulating, next week’s trading could offer more insights. Despite recent setbacks, both the Nasdaq and the S&P 500 continue to hover above their 50-day moving averages, potentially consolidating in what appears to be a bullish flag formation. I guess we’ll see what Monday brings if no rockets are fired over the weekend.
However, before delving further into our analysis, it’s important to note that today’s scanner results are virtually non-existent. Consequently, readers might consider taking the weekend off, as there are scant daily setups worth sharing. Illustrating on charts would be a mere formality, as I don’t see any new opportunities. There will be no daily setups today, although I will post the scanner results at the bottom of the report as usual. Now, let’s dissect the market commentary.
Among the major indexes, the Nasdaq Composite bore the brunt of the downturn, plummeting by 1.6%, resulting in a 0.5% decline for the week, marking its third consecutive weekly setback. While it has slipped below its 21-day exponential moving average, it’s managing to hold above the critical 50-day simple moving average. Despite this downturn, the index still boasts an impressive nearly 8% gain for the year. The focus now lies on whether the price action can maintain above the 50-day moving average, thereby confirming the potential bull flag pattern. Any breach below this level would cast doubts on this scenario, potentially signaling further downside risks.
Nasdaq – Daily Chart
Similarly, the S&P 500 experienced a turbulent session, closing 1.5% lower, marking its steepest decline since January. It has now retreated below the 21-day exponential moving average and is testing support at the crucial 50-day moving average. Despite a 1.6% decline for the week, the benchmark index maintains a healthy 7.6% gain for the year. The coming week will provide clarity on whether this price action is merely a test of the 50-day moving average or indicative of a more significant trend reversal.
S&P 500 – Daily Chart
Meanwhile, the Dow Jones Industrial Average witnessed a sharp decline of 2.4%, reaching its lowest level since late January, with the daily 21-day exponential moving average threatening to cross below the 50-day moving average, hinting at a potential bearish signal.
Dow Jones Industrial Average – Daily Chart
In the realm of small caps, the Russell 2000 dipped by 2.9%, revisiting levels last seen in late February, raising the possibility of a retest of the initial breakout line on the chart.
Russell 2000 (ETF) – Weekly Chart
Market breadth remained overwhelmingly negative when looking at the red-light/green-light breadth system, with decliners outpacing advancers by a ratio of approximately 5-to-1 on the New York Stock Exchange and exceeding 3-to-1 on the Nasdaq exchange. Notably, when looking at what worked last week, all S&P 500 sector groups closed in the red.
The Red-Light/Green-Light Breadth System
What Worked Last Week
On the fixed-income front, the 10-year Treasury yield surged by 12 basis points to reach 4.5%, hitting a five-month peak of 4.59% on Thursday. Investors are now only contemplating a slight chance of a Federal Reserve rate cut in June, with sentiments leaning towards a potential move in July.
10-Year US Treasury Yield
The U.S. dollar emerged as a formidable force this week, surging to its highest level since November. Its ascent can be likened to a wrecking ball, unsettling markets and exerting pressure on commodities. Several factors contribute to this surge: escalating geopolitical tensions, particularly in the Middle East, are bolstering the dollar’s status as a safe haven. Additionally, robust job numbers diminish the likelihood of Federal Reserve rate cuts, further reinforcing the dollar’s position. Meanwhile, the European Central Bank’s indication of potential interest rate cuts adds to the dollar’s strength. Notably, the yen experienced a significant decline, plunging to a fresh 34-year low amidst the broad dollar rally.
US Dollar – Weekly Chart
Crude oil experienced a 1.4% decline this week, settling at $85.66 per barrel, retracing from Friday’s intraday high of $87.67. However, the trajectory of this chart could hinge on a binary outcome, contingent upon developments over the weekend in the Middle East. Given the heightened geopolitical tensions in the region, investors are advised to stay vigilant and tuned in for potential market-moving events.
Crude Oil – Weekly Chart
The Toronto Stock Exchange encountered a substantial setback on Friday, marking its most significant decline in nearly two months. Declines across financial and resource shares fueled the downturn as investors seemed to assess recent market gains alongside the looming risk of a broader conflict in the Middle East. The TSX concluded the session down 210.12 points, or 0.95%, settling at 21,899.99, representing its most extensive decline since February 13th. Over the course of the week, the exchange incurred a loss of 1.64%, following eight consecutive weeks of gains, although price action is still well above the 50-day or 10-week moving average.
TSX – Weekly Chart
Copper prices witnessed a robust performance throughout the week before succumbing to the broader sell-off in commodities. The initial strength gave way to volatility, mirroring the fluctuations seen across various asset classes. As with other market movements, Monday’s trading session could provide valuable insights into whether this price action is primarily driven by escalating fears in the Middle East or indicative of broader underlying trends signaling a potential shift in market sentiment.
Copper – Weekly Chart
Gold continued demonstrating a robust week, posting a solid 1.2% gain to a closing price of $2,374.20. However, the precious metal retreated from its Friday highs, indicating some profit-taking or plan old market volatility. Despite this pullback, gold’s performance underscores its status as a safe-haven asset amidst uncertainty, attracting investor interest amid geopolitical tensions and strong inflation.
Gold – Weekly Chart
Silver witnessed a robust week, continuing its powerful breakout trajectory with notable volume. However, the metal faced a pullback alongside market volatility towards the end of the week.
Silver – Weekly Chart
The uranium theme experienced a robust week until succumbing to Friday’s market volatility, echoing the broader trend across various sectors. Monday’s trading session is anticipated to provide crucial insights into the resilience of the uranium sector amidst prevailing market turbulence.
Uranium Theme – Global X Uranium ETF
The price of Bitcoin has retraced to test its 50-day moving average amidst ongoing market volatility. Investors are closely monitoring this level, hoping for price stability and a potential bounce. This critical juncture serves as a pivotal “line in the sand,” where Bitcoin’s ability to hold above or below this moving average could signal the direction of future price movements.
Bitcoin – Daily Chart
To conclude our report, we thank you for your engagement and insights. Your feedback is valuable, and we encourage you to share your recommendations. Stay attentive to the Daily Setups, the Workspace, and the Watchlists for emerging opportunities. Additionally, be sure to explore the PDFs of Friday’s scan results provided below. Until next time, happy trading!
US Scanner Results
Click on the CandleGlance chart to view it in full size. Find a chart that matches your criteria or interests. You can easily save it to your watchlist on StockCharts.com for further analysis and tracking or copy and paste the ticker list into your chart provider.
EXPORT – US Watchlist Scan – 2024-04-12
AAON, AGYS, ALL, AOS, CASY, CPNG, DFIN, ETN, FCFS, GTES, HWKN, IZM, JCI, KOF, MAMA, MUSA, ODFL, OSIS, STT, SWIN, WIRE, WSO
Canadian Scanner Results
Click on the CandleGlance chart to view it in full size. Find a chart that matches your criteria or interests. You can easily save it to your watchlist on StockCharts.com for further analysis and tracking or copy and paste the ticker list into your chart provider.
EXPORT – Canadian Scanner Results – 2024-04-12
ALA.TO, ASCU.TO, ATRL.TO, CHR.TO, CPH.TO, CVO.TO, DC/A.TO, DRX.TO, DTC.CA, DV.V, EFX.TO, ETL.V, FHYD.V, FIH/U.TO, FWZ.V, GEI.TO, GEO.TO, GMIN.TO, GPAC.V, GRID.TO, GTWO.V, HMM/A.TO, ILLM.TO, ISO.V, JAG.TO, LIF.TO, MDNA.TO, MOOO.CA, MSA.TO, NVEI.TO, ORA.TO, PRB.TO, PRL.TO, RBA.TO, STLR.TO, TCW.TO, TNZ.TO, TVK.TO, U/UN.TO, WCN.TO, WCP.TO, WIFI.CA, XTG.TO, YGR.TO, ZDC.V, ZEN.V
