Market Report Jul 30 2023
Reviewing the market dynamics of this past week, the story has been dominated by the theme of volatility. Market indices experienced significant movement from Monday through Friday, with the Dow Jones registering its 11th and 12th consecutive gains on Monday and Tuesday, respectively. Both the Dow Jones and S&P 500 touched 52-week intraday highs. However, they fell short of maintaining that momentum.
Fed Chair Powell's speech on Wednesday, alongside the FOMC rate decision, introduced an element of uncertainty, not achieving the bullish push we might have hoped for. Thursday started positively, influenced by favourable earnings and guidance from Meta. But by the time Europe closed and New York neared lunchtime, the markets had reversed course dramatically.
The sharp downturn prompted us to place stop losses on all our swing trades, a decision which initially seemed prudent based on the bearish candlestick on Thursday. However, upon reevaluation on Friday, we perceived the market not as bearish as we initially thought, resulting in us taking a long position on the E-Mini. The market's movement, encapsulated by a quasi-bullish engulfing candle, suggested our initial caution on Thursday may have been overdone. This illustrates how our understanding evolved and the strategic changes we made in response.
Friday saw a robust upward trend, with mega-cap stocks demonstrating strong performance. This coming week will be primarily shaped by two forthcoming jobs reports, the non-farm payrolls. These will cause some market anticipation, possibly leading to quieter trading, leading to their release.
In other news, British billionaire Joe Lewis, owner of Tottenham Hotspurs, has been charged with insider trading. While this might not affect us directly, it's worth watching developments. Additionally, Elon Musk announced a change of Twitter's name to 'X', a move some analysts suggest could impact the company's valuation by between $4bn to $20bn.
CrowdStrike looks promising for long-term investment on the stock front due to increasing cloud security threats. We also have several significant earnings reports to look out for this week. Interestingly, talk of recession on earnings calls has dramatically diminished, replaced by a growing focus on AI.
Microsoft, whose earnings report we hold, presented disappointing guidance. However, we believe the situation is not as dire as presented. Despite a downturn in its price, Microsoft remains an AI frontrunner and a stock we intend to add to if prices continue to dip. Meanwhile, Apple, another of our holdings, has been performing well and has earnings this week. The future trajectory of these stocks will depend on market reactions to these earnings and other developments.
Let's go trade!
Anne Chapman
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Let's go trade!
