Tuesday: Early Sellers Turn Into Late Buyers
The index’s seven day winning streak finally came to an end. The weekly/all time high from Friday (4347) was bested only slightly in premarket when it peaked at 4348. The all-time closing high held up for most of the premarket session (4342.75), but gave way off the opening bell and set the stage for 40+ handle retreat.
However, the index did find support just under Friday’s Globex low (4308) at 4305 and staged a solid rebound. It managed to trim a majority of its losses for the session, posting its second all-time closing high, 8.75 handles lower at 4334.
When Amazon.com (NASDAQ: AMZN) was discussed in the weekly update, I had no idea the breakout would come so soon and be so violent. Besides the technical breakout of the 11-month consolidation period, a favorable piece in Barron’s discussing the transition in power was another catalyst for the rally.
Amazon had its best day since October 12 and gained $164.76 to close at $3675.74.
Chinese stocks with and without the aid of the Chinese government wreaked havoc in Tuesday’s session. Especially Weibo Co. (NASDAQ: WB) that popped and dropped due to privatization rumors.
More on Weibo Co.: https://tinyurl.com/j3f3xxfj
Wednesday: Oil Tanking Brings Out The BFTD Crowd
After flirting with an all time high and closing high territory off the regular session open, the sharp retreat in Crude Oil instigated a swift and fairly deep decline. After making quick work of Tuesday’s close and the premarket low, buyers stepped in well ahead of Tuesday’s low (4305.25) at 4320.25 and reversed course.
The S&P 500 index recouped all of its earlier losses and made a new all-time high by a good margin (4353.25 vs. 4348) and posted a new all-time closing high as well. For the session, the index was higher by 14.50 points at 4248.50.
Big tech continues to attract money during the recent market rotation. Apple inc. (NASDAQ: AAPL) The issue extended its winning streak to seven sessions, adding $2.52 to close at $144.47, which is within striking distance of its all-time high of $145.02.
The latest short squeeze target is Carver Bancorp (NASDAQ: CARV).
More on Carver Bancorp: https://tinyurl.com/a66d5pww
Thursday: Finally, A Red Day
For the first time in a long time, the S&P 500 was deep in the red during the premarket session. There was no specific news catalyst, although many blamed it on the price action in Tresasury’s, perhaps only a contributing factor to an overbought market.
The premarket low (4279.25) was tested during the first hour, but when the index could go no lower than (4280.25) in the first hour, buyers came to the resume.
The index was able to rally in the lower end of Wednesday’s range (4320.25), but peaked a few points higher (4322.75) and range bound (4300-4320) for the remainder of the session.
By the close, the index had its worst day since June 18 and closed lower by 36.75 handles at 4313.
When a big name stock gets hot, it stays hot under almost any condition. That statement applies to Amazon.com Inc. (NASDAQ: AMZN), breaking out of an 11-month slumber on Tuesday.
After a much lower open, beyond Wednesday’s low ($3678.91), it dipped another 22 points and found massive buyers on the dip at $3621.12 and sharply reversed course. It went to post a new all-time high ($3759.99) and all-time closing high by $34.83 at $3731.41.
Friday: Round Trip Back To New All-Time High
If you did not buy the dip under 4300 in the S&P 500 index on Thursday, you only had a chance during premarket trading when the index bottomed at 4293 and never looked back.
The biggest driver of the S&P 500 index was its largest component, Apple Inc. (NASDAQ: APPL) which surged $1.87 to close $145.11. In addition, other big tech companies were strong and the banks finally decided to participate on the upside.
Also, reopening stocks such as the airlines and cruise line stocks were able to trim some of the losses from earlier in the week.
The index closed strong and added 47 handles to end the week at a new all-time closing high of 4360.
Ending The Week On A High Note
Investors were anticipating a good jobs number as the S&P 500 index spent very little under Thursday’s all-time closing high and edged higher during premarket trading. Once the actual data was released there was a slight dip and then continued higher into unknown territory.
It improved on the former all-time high by over 30 handles, reaching 4347 and ended the session higher by 32 points at 4342.75. That marked seven consecutive sessions in which the index made a new all-time high and all-time closing high.
The wicked price action continues in Virgin Atlantic (NYSE: SPCE) ahead of its space launch on Sunday. Over the past two weeks, the issue has found a relentless buyer in the lower $43 area (4 of 7 daily lows from $43.02 and $43.19), that refuses to allow the issue to go any lower.
On the upside, there have been major sellers in the $50 handle (highs in three of the last five sessions from ($52.64-$54.40). Investors that are long the issue are banking a flawless trip into and return from space. If all goes according to plan, the issue may once again present traders with a much higher opening to conted, perhaps at or above its all-time high ($62.80).
On the other hand, any problems or delays may have a disastrous effect on its share price. If so, the major support at the $43 may come into play
The Week Ahead
The S&P 500 index will attempt to follow through and Friday’s strong close, unlike last week, when the rally stalled on Tuesday, which led to Thursday’s brief retreat.
All that matters for now from a technical standpoint, is Friday’s all-time high (4364) and all-time closing high (4360).
While the markets traded off momentum and technical breakouts, investors will have to contend with actual fundamental information this week. On Tuesday, the official start of Q2 earnings as the Street hears from the big banks JP Morgan (NYSE: JPM) and Goldman Sachs (NYSE: GS). Wednesday’s earning slate will include Bank of America (NYSE: BAC), PNC Financial (NYSE: PNC). Also, investors are looking for a catalyst to revive the “reopening” trade, which may come from Delta Airlines (NYSE: DAL).
Also, the inflation debate will be rekindled when the Bureau Of Labor Statistics released the Consumer Price Index, which forecast at 4.9 percent year-year-year rise after a 5 percent jump in May.
More key economic data on Friday, when the University Of Michigan releases its Consumer Sentiment Index for July. Also, the Census Bureau will report retail sales data for June. The Street will be looking for a smaller monthly decline than in May.
Issue With Upcoming Catalyst: Big Banks
Q2 earnings start in earnest on Tuesday banks with Goldman Sachs (NYSE: GS), JP Morgan (NYSE: JPM) and Bank of America (NYSE:BAC). Even with the recent retreat, these issues are having a great 2021.
Whether or not the firms can keep pace with the trading revenue from the past few quarters and their outlook moving forward, now that rates may not be rising, will determine the price action. The question remains whether or not the recent pullback is a “buy the dip” opportunity in the sector or if this is a change in the long-term trend.