Market Posts Bullish Numbers for May
*For the week, the Nasdaq was up 2% while the S&P rose 1.9%. The Dow added 1.6% and the Russell gained 1.4%. For the month of May, the Nasdaq surged over 10%; the S&P jumped 6%; the Russell rallied 5%; and the Dow soared 4%.
*Once again, the uptrend channels held for the Dow and the Nasdaq with the S&P’s getting stretched. The Russell fell out of its uptrend channel on May 21st but an adjusted uptrend channel off the May 23rd low keeps a fresh one in play.
*With the first-quarter earnings season in the books, economic news and tariff concerns will likely dominate the headlines over the near-term. However, there will be a few notable companies reporting throughout June that could provide traders some clues on the economy and the consumer. Lululemon Athletica (LULU), DocuSign (DOCU) and Toro (TTC) highlight a busy Thursday.
Wall Street was mostly weak on Friday after the Trump administration indicated trade negotiations with China is at a stalemate and may require the Presidents from both parties to come together for the next possible steps. Volatility spiked above a key level of resistance shortly after the open following the news before the major indexes made a late day comeback off the lows.
The Nasdaq fell to a low of 18,847 before ending at 19,113 (-0.3%). Key support at 19,000 was cracked but held. Resistance remains at 19,250.
The S&P 500 closed just a half-point lower at 5,911 (-0.01%) after bottoming at 5,843. Key support at 5,850 held. Resistance is at 5,950.
The Dow traded up to 42,376 while settling at 42,270 (+0.1%). Resistance at 42,250 was recovered. Support is at 42,000.
Earnings and Economic News
Before the open: Campbell Soup (CPB), Science Applications International (SAIC)
After the close: Credo Technology Group (CRDO), Pyramid Oil (PDO)
Economic News
PMI Manufacturing Index – 9:45am
Construction Spending – 10:00am
ISM Manufacturing Index – 10:00am
Technical Outlook and Market Thoughts
For the week, the Nasdaq was up 2% while the S&P rose 1.9%. The Dow added 1.6% and the Russell gained 1.4%. For the month of May, the Nasdaq surged over 10%; the S&P jumped 6%; the Russell rallied 5%; and the Dow soared 4%.
Once again, the uptrend channels held for the Dow and the Nasdaq with the S&P’s getting stretched. The Russell fell out of its uptrend channel on May 21st but an adjusted uptrend channel off the May 23rd low keeps a fresh one in play.
This is another example of “stretch” and why we like to do daily technical analysis. In fact, throughout Friday’s action we were doing chart work and watching key support levels.
The Nasdaq remains in a 14-session trading range between 18,500-19,250 following the May 12th breakout. Thursday’s higher multi-month peak at 19,389 was a tease. Continued closes above 19,250, and a level the bulls need to recover to start the week, confirms a possible push towards 19,750-20,000.
A drop below 18,500 and the 200-day moving average would be bearish signals for lower lows down to 18,250-18,000. This level also represents the bottom of the current uptrend channel.
The S&P 500 remains rangebound between 5,800-5,975 with the May 23rd low at 5,767. Multiple closes below 5,800 and the 200-day moving average would suggest further weakness to 5,700-5,650.
Key resistance is at 5,950 with the May 19th top at 5,968. There is upside potential to 6,000-6,100 on closes above the aforementioned price points.
The Russell 2000 held its adjusted uptrend channel while hovering around 2,075. The March 24th and 25th hit a double top high at 2,110 with more crucial resistance at 2,135. If these levels are cleared and held, there is gap up potential towards 2,175-2,200 and the 200-day moving average.
Key support is at 2,050 with Friday’s low at 2,051. Multiple closes back below this level would imply a further slide down to 2,000 and the 50-day moving average.
The Dow has closed above 42,000 for four-straight sessions with backup support at 41,750-41,500. A close below 41,000 and the 50-day moving average would be a bearish development.
The bears have been holding 42,500 and the 200-day moving average for seven-straight sessions. Closes above 42,800, specifically, would be a bullish development for the blue-chips with further strength to 43,000-43,250.
The Volatility Index (VIX) bubbled to a high of 20.55 with key resistance at 20 getting topped but holding. Closes above resistance at 24-26 and the 50-day moving average would be a renewed bearish development for the stock market.
Closes below 17.50 are needed to give the bulls some momentum. There was one close below 17.50 on May 16th that teased the market.
With the first-quarter earnings season in the books, economic news and tariff concerns will likely dominate the headlines over the near-term. However, there will be a few notable companies reporting throughout June that could provide traders some clues on the economy and the consumer. Lululemon Athletica (LULU), DocuSign (DOCU) and Toro (TTC) highlight a busy Thursday.
The second-quarter closes on month end and companies will start to announce their numbers the second week of July. We expect a busy summer of trading so stay locked-and-loaded as a run to all-times highs could be coming, or another double-digit correction if key support levels start to crack.