Insider Tips - Weekly Stock Market Report - Week September 9, 2024
Weekly Insider Tips - September 9, 2024
This week, it was a tough market with four days of selling and a general downturn, as the tech stocks took a beating. We saw conflicting signals, but generally low volume selling suggests some underlying bullish potential. Bonds and gold are showing strength amid concerns over the economy, and volatility is on the rise, offering potential opportunities but also heightened risk. Several big names like Apple, NVIDIA, and Tesla are testing critical support levels, and overall, caution is advised heading into next week.
Technical Analysis:
This week has been marked by considerable market downside, with four consecutive days of selling across major indices. The NASDAQ in particular saw a significant decline, with a "lightning pattern" in play suggesting it could drop to 15,000 points. It's currently trending toward the 200-day moving average, so we need to respect the market's bearish momentum.
The S&P 500 looks slightly better, but it’s testing the 50-day moving average, which is critical for traders to watch. However, the volume of selling is relatively low, which can indicate potential bullish sentiment in the long term. The Dow is also in a similar position, heading lower but on low volume, which again might not be as negative as it appears.
The VIX (Volatility Index) has increased, reflecting heightened market uncertainty and volatility. This rise in the VIX indicates more turbulent trading conditions in the near future, but also more opportunities if played wisely.
The bond market, represented by TLT (the 20-year bond), is showing strength, with bond prices increasing as interest rates decline. This reflects a flight to safety as economic concerns weigh on investor sentiment. The same flight to safety is observed in gold, which has been gaining strength.
Market Trends:
This week's selling could be linked to fears of a recession, as well as reactions to recent economic data, including unemployment and inflation concerns. Despite widespread pessimism, the low-volume selloff across most indices suggests that there may still be underlying bullish sentiment.
There’s also a notable divergence between sectors. While tech stocks like those in the NASDAQ are driving the decline, other parts of the market, such as the Dow and broader indices like the NYSE, are showing less severe declines. The market is reacting cautiously to various economic reports and waiting for more clarity on Federal Reserve policy.
Individual Stocks:
- Apple (AAPL): Despite the rough market, Apple appears relatively strong, bouncing around its 50-day moving average on low volume. It’s holding up better than many others.
- NVIDIA (NVDA): While strong in recent weeks, NVIDIA now looks vulnerable, with the potential for a dreaded H pattern. It’s near its 200-day moving average, a critical level for future support.
- Tesla (TSLA): Tesla had a great week until Friday, where it tested its 50-day moving average. It previously bounced off the 200-day moving average and moved higher, but now investors need to watch closely how it holds up.
- Amazon (AMZN): Amazon has been weaker, bouncing off the 200-day moving average but showing relative weakness. Its relative strength index is at 69, suggesting it’s close to being oversold, but the chart pattern hints at more downside potential.
- Google (GOOGL): Google is also trending lower, dealing with competition from AI developments. It’s heading down through its 200-day moving average on decent volume, which is a bearish signal.
- Meta (META): In contrast, Meta platforms are looking stronger, possibly setting up for a run at its previous high. It bounced off its 50-day moving average, indicating some resilience in this volatile environment.
Key Takeaways:
- Rising Volatility: The VIX is up, suggesting increased market volatility in the near term. This signals both risk and opportunity, depending on how you position yourself.
- Bonds and Gold: Investors are moving to safety with bonds and gold showing strength amid concerns about the economy.
- Tech Weakness: Tech stocks have been the biggest drag on the market this week, with stocks like NVIDIA, Amazon, and Google showing downside momentum. However, some stocks like Apple and Meta are holding up better.
- Opportunities and Risks: Given the conflicting signals, traders need to be cautious. There are still opportunities, especially for those using protective strategies like covered calls or buying puts, but risks are heightened.
Conclusion:
It’s been a rough week in the market, with most indices and big-name stocks taking a hit. While selling has been on low volume, which offers a glimmer of hope for bulls, the rise in volatility means the market is likely to remain choppy for the foreseeable future. Bond and gold strength indicates a flight to safety as investors brace for more bad economic news. Stay cautious, protect your investments, and watch key support levels on major stocks to see where the market heads next.
Current Market Condition:
The market shifted to a "yellow" market condition after four consecutive days of selling last week. The NASDAQ, in particular, has turned from bullish to bearish, signaling caution as it trends toward the 200-day moving average. The yellow condition suggests potential volatility, and while there are no clear indications of a bounce or continued decline, it’s important to respect the market's current downward momentum. Traders should stay cautious and observe key levels closely to gauge the next move, with a possible shift to red this week.
Stock Tip of the Week:
Covered Calls are a great way to make income, but these two stocks may have some upside too. Check out this latest video where I dive deep into Tesla and NVidia!
Keep an eye on these stocks showing a specific pattern and dropping! If you're into stock trading, this video is a must-watch to stay informed. Watch it here.
Passive Income:
NVidia reported earnings last week and has been down almost 20% since! Do you panic? What to do to avoid panic and emotional trading. Watch the full video here.
Podcast this Week:
In this episode of the Wealth Architect podcast, host Mark Yegge is joined by Dr. Darla Bishop, founder of FinancesSee and author of How to Afford Everything. Dr. Bishop shares her insights on building a positive relationship with money, identifying your "magic number," and creating a financial plan that supports a stress-free and fulfilling life. She emphasizes the importance of financial education and offers practical steps to achieve financial well-being. Watch this full episode!
