Markets To Rally!

New Highs by Thursday?

KR Opinion

Monday's trading session was notably subdued, marking one of the least volatile periods we have observed. The market fluctuated within a narrow range, lacking any significant indicators of directional momentum. Overall, this year has presented an unconventional pattern of market behavior, with trends displaying erratic movements while generally ascending.

Such trends lack clear conviction and are typical of more stable market conditions. Additionally, trading volume has been low, contributing to unpredictable outcomes that have affected investors on both sides of the market, irrespective of their bullish or bearish stances.

Numerous instances have occurred where market setups have unpredictably shifted, impacting investment outcomes.

Looking ahead to the remainder of the week, there is an anticipation of 'window dressing' activities, which may introduce further volatility, particularly towards Wednesday and Thursday. Given that this week is shorter due to a holiday, a spontaneous shift in market direction is expected, although it appears to be unpredictable.

The technical analysis section reveals minimal signs of market direction, with only a slight indication of a potential bullish movement in the coming days. However, any significant change is unlikely. This year's market trajectory has been characterized by sudden shifts, followed by consolidation in both upward and downward directions, though the general trend has been incrementally upward.

In a recent YouTube video on the Kindle Report, I discussed an exceptionally unusual market pattern. As we approach Tuesday, the focus will shift to the release of the durable goods orders, which are anticipated to show a 1.3% increase following a significant decline of -6.1% in the previous month.

Additionally, the Federal Housing Finance Agency (FHFA) housing price index is set to be released. While this report is not deemed highly significant, more attention is being directed towards the Case-Shiller home price index, which is expected to report a 6.7% increase from the prior 6.1%.

One of the persistent concerns among analysts is the housing market's stability, which, despite a slight year-over-year decline, continues to contribute positively to the economy's overall stability. Lastly, consumer credit data is expected to be released, with projections suggesting it will remain largely unchanged from the previous month, indicating a lack of expansion in consumer borrowing.

Looking Back on Monday’s Action

The stock market commenced the week with subdued activity, following the previous week's upward trajectory. A significant downturn in the late afternoon, for which no specific reason was identified, led the S&P 500 to close nearly at its lowest level for the day, showing a 0.3% decline. Similarly, the Nasdaq Composite experienced a 0.3% reduction, while the Dow Jones Industrial Average dropped by 0.4%. In contrast, the Russell 2000 managed a slight increase of 0.1%.

This negative trend can be attributed to a period of normal market consolidation, though the downturns were relatively mild. The decline in several major tech companies and the semiconductor sector exacerbated the downturn. Specifically, Alphabet, Meta Platforms, and Apple saw decreased stock values after the European Union Commission's announcement of non-compliance investigations against them. Additionally, the semiconductor sector suffered due to China's prohibition of AMD and Intel chips in its government computers.

In other corporate news, Boeing announced that CEO Dave Calhoun will resign at the end of 2024. Among the S&P 500 sectors, eight out of eleven recorded losses, with declines ranging from 0.2% in the healthcare sector to 0.7% in industrials. The energy sector, however, stood out with a notable gain, driven by an increase in oil prices to $81.95 per barrel, marking a 1.7% rise.

The stock market also faced pressure from rising Treasury yields. The yield on the 10-year note increased by four basis points to 4.25%, and the yield on the 2-year note went up by three basis points to 4.63%. Furthermore, a $66 billion auction for 2-year notes experienced weak demand, contributing to the day's stock challenges.

Reviewing today's economic data:

- February's New Home Sales were reported at 662,000, slightly below the KR Forecast prediction of 680,000. The previous figure was adjusted to 664,000 from 661,000.

A key insight from this report is that the overall volume of sales remained nearly unchanged from January, while the median selling price significantly decreased for the sixth consecutive month, providing relief for potential buyers.

Looking ahead to Tuesday's economic calendar:

- At 8:30 AM ET, February's Durable Orders are anticipated, with the KR Forecast expecting a 1.3% increase after a previous decline of 6.1%. Durable Orders, excluding transportation, are projected to rise by 0.4%, following a slight decrease of 0.3%.

The January FHFA Housing Price Index will be released at 9:00 AM ET. The last figure showed a modest increase of 0.1%. Additionally, the January S&P Case-Shiller Home Price Index is expected, with the KR Forecast predicting a rise of 6.7%, up from 6.1%.

- At 10:00 AM ET, March's Consumer Credit is forecasted to remain at 106.7, identical to the previous month's figure.

WaveTech Database