The Bottom Line:
- Key economic events for the upcoming week include speeches by Fed officials, housing data, manufacturing numbers, initial jobless claims, GDP numbers, and the PCE data report on Friday.
- The market sentiment is currently more on the fear side, with the put/call option positioning showing a downtrend and the VIX approaching a neutral phase.
- SPY is range-bound but showing signs of a potential change in market structure, with a bearish-looking channel developing.
- Bitcoin and Nvidia are both on a downtrend, while Tesla is trading within a range but showing some bullish accumulation and a potential inverse head and shoulders pattern.
- The QQQ, Apple, Amazon, and Meta are all showing signs of weakness and potential for further downside, with key support and resistance levels to watch.
Key Economic Events to Watch: Fed Speeches, Housing Data, and More
Fed Speeches and Economic Data Releases
The upcoming week features several notable economic events that could impact market sentiment. On Monday, Fed Governor Waller is scheduled to deliver a speech, though it is not expected to cause significant market movements. Tuesday will see another Fed speech from Governor Bowman, along with the release of housing data and manufacturing numbers. While these events are worth monitoring, they are unlikely to trigger substantial volatility.
Key Reports to Watch: GDP and PCE Data
Thursday’s initial jobless claims and GDP numbers are expected to be more influential, potentially causing some market fluctuations. However, the most crucial event of the week is likely to be Friday’s release of the Personal Consumption Expenditures (PCE) data report. This report will provide valuable insights into inflationary trends and could have implications for the Federal Reserve’s monetary policy decisions. Market participants will be closely monitoring this data to gauge its impact on the markets.
End of Q2 and Earnings Season Kickoff
Friday also marks the last trading day of June and the end of the second quarter (Q2) of 2023. The conclusion of a quarter often brings increased volatility to the markets. As we transition into July, the focus will shift to the start of the next earnings season. Several notable companies, such as FedEx, General Mills, and Nike, are scheduled to report their earnings in the coming week. In the following weeks, the earnings calendar will become increasingly populated with more companies releasing their financial results, which could significantly influence market sentiment and individual stock performances.
Market Sentiment: Fear Prevails as Put/Call Option Positioning Declines
Put/Call Ratio Indicates Increasing Bearish Sentiment
The current market sentiment leans towards fear, with sellers maintaining a dominant presence. Despite the market’s recent greed relative to the 125-day moving average, the put/call ratio is showing signs of a downtrend. This suggests that more call options are being closed while put options are being held, indicating a growing bearish sentiment among market participants. The slight uptick in the put/call ratio further reinforces this shift towards a more cautious outlook.
VIX Approaches Neutral Territory, Awaiting Breakout
The CBOE Volatility Index (VIX), often referred to as the “fear gauge,” is currently hovering around the 13 level, approaching neutral territory. However, it has yet to decisively break above the 50-day moving average, which would signal a more significant move in either direction. Market participants will be closely monitoring the VIX for any potential spikes or breakouts, as this could indicate a change in market sentiment and increased volatility.
Cautious Positioning Amid Uncertain Market Conditions
As fear continues to dominate market sentiment, investors and traders are adopting a more cautious approach to their positioning. The decline in the put/call ratio and the VIX’s proximity to neutral territory suggest that market participants are bracing for potential volatility and downside risks. This cautious stance is likely to persist until there is greater clarity regarding the market’s direction and the impact of upcoming economic events and data releases.
SPY Range-Bound with Potential Bearish Channel, While Bitcoin and Nvidia Trend Downward
SPY Range-Bound, Potential Bearish Channel Developing
The S&P 500 (SPY) is currently trading within a range, but there are indications of a potential bearish channel forming. Previously, SPY had been making higher highs and higher lows, pushing up steadily. However, recent price action suggests a possible decline. If SPY retests liquidity and fails to break resistance around the 545.42 level, it could dip down to the 542 area, where an imbalance is present. Traders should monitor this development closely, paying attention to whether SPY establishes a lower high or experiences a breakout to fill the gap before dipping lower.
Bitcoin and Nvidia Showing Weakness, Trending Downward
Bitcoin is currently experiencing a selloff, with the cryptocurrency trending downward. Resistance is present around the $64,000 level, while support is found at approximately $63,500. The established downtrend suggests ongoing weakness in Bitcoin’s price action.
Similarly, Nvidia (NVDA) is displaying bearish characteristics, with a falling wedge pattern developing. The stock has support at the $125 and $122 levels, while resistance is present around the $129 area. Nvidia remains in a strong downtrend but has not yet lost the $125 support level. Traders should monitor which level is tested next, as a loss of support could lead to further downside and gap-filling.
Tesla Range-Bound, Potential Bullish Patterns Emerging
Tesla (TSLA) is currently trading within a range, with support at $180 and resistance at $183. Despite this range-bound movement, the stock is showing signs of potential bullish momentum. An accumulation structure and a bullish wedge formation suggest that buyers are defending the stock. Additionally, a cup and handle pattern is developing, which could indicate future upside potential.
Zooming out to the 4-hour timeframe reveals an inverse head and shoulders pattern, further supporting the possibility of a bullish move. However, the continuation of this trend will likely depend on the upcoming delivery numbers, which are set to be released in approximately 1.5 weeks.
Tesla Shows Bullish Accumulation Amidst Range-Bound Trading
Accumulation Structure and Bullish Wedge Formation
Tesla is currently trading within a range, with support at $180 and resistance at $183. Despite this range-bound movement, the stock is exhibiting signs of potential bullish momentum. An accumulation structure and a bullish wedge formation suggest that buyers are actively defending the stock. These patterns indicate that market participants are gradually building positions in Tesla, which could lead to a breakout to the upside.
Cup and Handle Pattern Suggests Potential Upside
In addition to the accumulation structure and bullish wedge, a cup and handle pattern is developing on Tesla’s chart. This pattern is often seen as a bullish signal, indicating that the stock may be poised for a move higher. The cup and handle formation suggests that after a period of consolidation, Tesla could experience a breakout, leading to a significant upward move in price.
Inverse Head and Shoulders on Higher Timeframes
Zooming out to the 4-hour timeframe reveals an inverse head and shoulders pattern, which further supports the possibility of a bullish move for Tesla. The inverse head and shoulders is a reversal pattern that typically occurs after a downtrend, signaling a potential shift in market sentiment. If Tesla can break above the neckline of this pattern, it could lead to a sustained move higher. However, the continuation of this bullish trend will likely depend on the upcoming delivery numbers, which are set to be released in approximately 1.5 weeks.
QQQ, Apple, Amazon, and Meta Display Weakness with Key Support and Resistance Levels
QQQ Displays Weakness on 4-Hour Timeframe
The Invesco QQQ Trust (QQQ) is showing signs of weakness on the 4-hour timeframe. The ETF’s ability to hold above the $480 level and its 20-day exponential moving average (EMA) will be crucial in determining its near-term direction. A loss of these key support levels could lead to a dip towards the $478 area. Conversely, if QQQ manages to hold above these levels, a potential rebound towards the $482 resistance level could be in play before a possible move back down.
Apple Faces Bearish Trend and Potential Gap Fill
Apple (AAPL) is currently experiencing a downtrend, with a double top pattern suggesting further weakness. The key support level to watch is around the $206 area, while resistance is present at the $210 level. Given the bearish trend, there is a strong possibility of additional downside in Apple’s stock price. A potential scenario could see Apple filling the gap down to its 200-day EMA before attempting a temporary bounce. However, even if a bounce occurs, the stock may establish a lower high before continuing its downward trajectory, as the overall trend remains bearish.
Amazon and Meta Display Mixed Signals
Amazon (AMZN) is showing a promising accumulation structure, with a cup pattern forming on its chart. The key support level to monitor is around $188, and if this level holds, a potential bounce could be in store. However, a loss of this support could lead to a dip towards the $187 level, where an imbalance is present. Meta Platforms (META) is currently in a downtrend, with resistance at $496 and support at $490. There is a risk of Meta’s stock price dipping lower, potentially following a “pop and drop” pattern. Traders should exercise caution, as the stock is displaying signs of weakness.
