Weekly summary of Large Cap and next week's trend (5/12-5/18)
Last week, SPX closed in the green for five consecutive trading days and approached the pressure zone around 5950. Although the Indices rose, it was observed that there was a weakening of bullish momentum at the individual stock level, particularly among leading stocks where the Bid momentum appeared insufficient. Considering this situation, it has been suggested to continue trimming profit positions this week while also establishing hedge positions on Thursday to mitigate potential market risks.
After hours on Friday, Moody's downgraded the USA's sovereign credit rating from the highest Aaa to Aa1. This marks the first time since S&P in 2011 and Fitch in 2023 that all three major rating agencies have agreed to downgrade the USA's credit rating. This reflects market concerns about the USA's fiscal path, which may exert pressure on market sentiment, further reinforcing our recommendation to establish hedge positions.
Russell 2000
IWM fell back over the last two days after reaching around 209.6 in the past two or three days, and on Friday it climbed back above 209.6. Notably, IWM has been hovering above the 8-day moving average, and Friday's volume showed an increase. The bottoms on Thursday and Friday have continued to rise, and there has been no filling of the lower gap in five days. However, throughout the entire Candlestick ascension, there has been no obvious pullback, suggesting sustained overextension. Additionally, the event of Moody's downgrading the USA's sovereign credit rating after hours on Friday necessitates attention to market dynamics before Monday's trading. If market sentiment suddenly shifts, it may lead to the lower gap being filled.
After hours on Friday, Moody's downgraded the USA's sovereign credit rating from the highest Aaa to Aa1. This marks the first time since S&P in 2011 and Fitch in 2023 that all three major rating agencies have agreed to downgrade the USA's credit rating. This reflects market concerns about the USA's fiscal path, which may exert pressure on market sentiment, further reinforcing our recommendation to establish hedge positions.
Russell 2000
IWM fell back over the last two days after reaching around 209.6 in the past two or three days, and on Friday it climbed back above 209.6. Notably, IWM has been hovering above the 8-day moving average, and Friday's volume showed an increase. The bottoms on Thursday and Friday have continued to rise, and there has been no filling of the lower gap in five days. However, throughout the entire Candlestick ascension, there has been no obvious pullback, suggesting sustained overextension. Additionally, the event of Moody's downgrading the USA's sovereign credit rating after hours on Friday necessitates attention to market dynamics before Monday's trading. If market sentiment suddenly shifts, it may lead to the lower gap being filled.
S&P 500
Looking at this week, SPY has opened with five consecutive green candles and has maintained its strength after a gap up. After reaching the position of 591.89 late Friday night, it continued to hover above. Additionally, SPX closed near 5950. Throughout the week, whenever the momentum weakened and seemed poised to go down, there would always be a sudden force pushing the price back up. Currently, it appears that the bearish momentum is not strong enough. Furthermore, I have observed a state of high control in the market. However, this performance also shows clear signs of overextension, as the price has not experienced a normal pullback but has continued to advance upward.
On the positive side, the S&P is still operating above the 8-day moving average, and although volatility has decreased, there has not been a significant rapid decline. On the downside, Moody's downgraded the USA's sovereign credit rating after Friday's close, and this event risk might cause market sentiment fluctuations before Monday's opening. Our suggestion is to be cautiously observant of Monday's pre-market sentiment and closely monitor whether SPY can stabilize above the 8-day moving average. Flexibly respond based on moving averages and key levels, avoid chasing highs, and beware of rapid pullbacks triggered by emotional fluctuations.
Nasdaq 100 Index (QQQ)
QQQ has also shown five consecutive trading days of green candles, demonstrating a strong upward momentum. However, similar to SPY, the rise of QQQ also displayed signs of overextension during the process, lacking significant pullback behavior. Nevertheless, QQQ remains stable above the 8-day moving average and has not experienced a rapid decline. It is important to note that Moody's downgraded the USA's sovereign credit rating after Friday's close, which may impact market sentiment before Monday's opening. Closely monitor changes in pre-market market sentiment on Monday and determine responses based on moving averages and key levels, exercising caution in operations.
Macroeconomic data:
May 22 (Thursday)
S&P Global Manufacturing and Services PMI (Preliminary): The manufacturing PMI is expected to be 49.9, down from the previous value of 50.2; the services PMI is expected to be 50.7, down from the previous value of 50.8, indicating a possible economic slowdown.
2. May 23 (Friday)
New home sales (April): Expected to provide the latest updates on the Real Estate market, with the market focusing on the impact of high interest rates on home buying demand.
Federal Reserve officials speaking: Several officials including Vice Chairman Jefferson and New York Fed President Williams will speak this week, and the market will look for clues about the direction of MMF policy.
Market participation and panic data.
Market participation and fear index:
Russell 2000: 85.68
S&P 500: 75.83
Nasdaq: 78.69
Fear and Greed Index: Currently at 71, in a greedy state, indicating that market breadth is in extreme greed while intensity is in a greedy state.
Suggestions for operations next week:
1. Pay more attention to the levels we provide and focus primarily on intraday trading: avoid chasing highs and cutting losses to prevent unnecessary losses.
2. Closely monitor market conditions and event occurrences, as many times emotions are digested after being dominated by events.
Looking at this week, SPY has opened with five consecutive green candles and has maintained its strength after a gap up. After reaching the position of 591.89 late Friday night, it continued to hover above. Additionally, SPX closed near 5950. Throughout the week, whenever the momentum weakened and seemed poised to go down, there would always be a sudden force pushing the price back up. Currently, it appears that the bearish momentum is not strong enough. Furthermore, I have observed a state of high control in the market. However, this performance also shows clear signs of overextension, as the price has not experienced a normal pullback but has continued to advance upward.
On the positive side, the S&P is still operating above the 8-day moving average, and although volatility has decreased, there has not been a significant rapid decline. On the downside, Moody's downgraded the USA's sovereign credit rating after Friday's close, and this event risk might cause market sentiment fluctuations before Monday's opening. Our suggestion is to be cautiously observant of Monday's pre-market sentiment and closely monitor whether SPY can stabilize above the 8-day moving average. Flexibly respond based on moving averages and key levels, avoid chasing highs, and beware of rapid pullbacks triggered by emotional fluctuations.
Nasdaq 100 Index (QQQ)
QQQ has also shown five consecutive trading days of green candles, demonstrating a strong upward momentum. However, similar to SPY, the rise of QQQ also displayed signs of overextension during the process, lacking significant pullback behavior. Nevertheless, QQQ remains stable above the 8-day moving average and has not experienced a rapid decline. It is important to note that Moody's downgraded the USA's sovereign credit rating after Friday's close, which may impact market sentiment before Monday's opening. Closely monitor changes in pre-market market sentiment on Monday and determine responses based on moving averages and key levels, exercising caution in operations.
Macroeconomic data:
May 22 (Thursday)
S&P Global Manufacturing and Services PMI (Preliminary): The manufacturing PMI is expected to be 49.9, down from the previous value of 50.2; the services PMI is expected to be 50.7, down from the previous value of 50.8, indicating a possible economic slowdown.
2. May 23 (Friday)
New home sales (April): Expected to provide the latest updates on the Real Estate market, with the market focusing on the impact of high interest rates on home buying demand.
Federal Reserve officials speaking: Several officials including Vice Chairman Jefferson and New York Fed President Williams will speak this week, and the market will look for clues about the direction of MMF policy.
Market participation and panic data.
Market participation and fear index:
Russell 2000: 85.68
S&P 500: 75.83
Nasdaq: 78.69
Fear and Greed Index: Currently at 71, in a greedy state, indicating that market breadth is in extreme greed while intensity is in a greedy state.
Suggestions for operations next week:
1. Pay more attention to the levels we provide and focus primarily on intraday trading: avoid chasing highs and cutting losses to prevent unnecessary losses.
2. Closely monitor market conditions and event occurrences, as many times emotions are digested after being dominated by events.
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
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