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Want to start the week ahead of the pack? Check out Momentum Mondays, where I cover the leading breakout stocks in the market, summarize the major events of the week ahead, and prepare investors for profitable trading.
Today, we will be taking a look at the broad stock market indexes to summarize the action of the last few weeks, then we will look at the economic calendar and earnings releases to address any market moving data coming our way. And finally, I will share four compelling technical trade setups in stocks with top Zacks Ranks.
Economic Data
It is a fairly light week in regard to economic data, highlighted by a number of Fed speakers throughout the week. There will be 11 occasions on which a member of the Fed board gives a speech with four on Tuesday and five on Wednesday.
In terms of actual data, on Monday we get ISM and PMI services, on Wednesday US trade deficit and Consumer Credit, and Initial Jobless Claims on Thursday.
Earnings reports are numerous this week as well. Notable reports include:
Monday: McDonald’s Corporation, Caterpillar Inc., and Palantir Technologies.
Tuesday: Eli Lilly and Company, Toyota Motor Company, Chipotle Mexican Grill and Amgen Inc.
Wednesday: Alibaba, The Walt Disney Company, Uber Technologies, PayPal Holdings, and Yum Brands.
Thursday: S&P Global, Philip Morris International, and Duke Energy Corporation.
Friday: PepsiCo, Enbridge, and Honda Motor Co.
Broad Market Update
Following last week’s FOMC meeting, equities first experienced a decent little sell-off, which was followed by aggressive buying into the end of the week, pushing stock indexes to new all-time highs.
I am definitely erring on the more cautious side in stocks, as this rally has pushed higher without any significant pullbacks for three months now. However, that is not a reason to go and short this market, as the price action is clearly still pointing higher. Additionally, for investors holding on to winning stocks, it might be worth bumping up those trailing stops for when the market does inevitably correct.
I am watching this upward trending channel in the S&P 500 (SPY - Free Report) (similar setup in the Nasdaq 100) to gauge sentiment. If the market can break below the lower bound, I will get much more defensive, although a test of 5,000 first feels highly likely.
Image Source: TradingView
There were some significant developments at last week’s FOMC meeting, as Jerome Powell further tempered interest rate cut expectations. Considering the persistent strength in the labor and wage market, the committee made more clear that the odds of a rate hike in March are falling.
The futures market reflects that, and in the FedWatch tool below, we can see that the odds of a March rate cut have fallen from 64% a month ago, to just 17% now. Odds of a May rate cut now stand at 60%.
Slightly more hawkish rhetoric from the Fed, and thus higher interest rates could act as a headwind for stocks between now and the next meeting in mid-March.
Image Source: CME Group
Technical Setups
Following the trend over the last few weeks, I will share four trading setups. The first two represent stocks with a more aggressive tilt, that should outperform if the market continues to rally, and the other two are more defensive, and should outperform if the market begins to correct.
Netflix (NFLX - Free Report) has formed a compelling bull flag following a strong earnings gap up. If Netflix stock can trade and close above the $570 level, it would signal a technical breakout. Alternatively, if the share price of Netflix breaks down below the $561 level of support, the setup is invalid, and investors may want to seek opportunities elsewhere.
Image Source: TradingView.com
CrowdStrike (CRWD - Free Report) , the cybersecurity firm has a very nice technical setup as well. Over the last two weeks, the stock has built a clean bullish consolidation. If CrowdStrike stock can trade and close above the $305 level, it would signal a breakout. However, below the $290 level of support and the setup is invalid.
Image Source: TradingView
The Progressive (PGR - Free Report) stock has been on a tear since mid-way through 2023, barely ticking down since then. The stock continues to build bullish patterns, and over the last nine days has formed a clean bullish consolidation. A break above $181.50 should send the stock to another new high, but below $176, and it should be avoided.
Image Source: TradingView
Finally, Textron (TXT - Free Report) , an aerospace manufacturer, has formed a compelling bullish pattern after a strong earnings gap up. Above $86.50 and the stock should make a swift move higher. Alternatively, a break below $84.50 would invalidate the setup.
Image Source: TradingView
Bottom Line
Even the best trading setups fail, so it is always important for traders to prioritize making a trading plan, following the plan, and utilizing strict risk management protocols.
Good luck this week traders!
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Momentum Monday: Stocks Continue to Push Higher
Want to start the week ahead of the pack? Check out Momentum Mondays, where I cover the leading breakout stocks in the market, summarize the major events of the week ahead, and prepare investors for profitable trading.
Today, we will be taking a look at the broad stock market indexes to summarize the action of the last few weeks, then we will look at the economic calendar and earnings releases to address any market moving data coming our way. And finally, I will share four compelling technical trade setups in stocks with top Zacks Ranks.
Economic Data
It is a fairly light week in regard to economic data, highlighted by a number of Fed speakers throughout the week. There will be 11 occasions on which a member of the Fed board gives a speech with four on Tuesday and five on Wednesday.
In terms of actual data, on Monday we get ISM and PMI services, on Wednesday US trade deficit and Consumer Credit, and Initial Jobless Claims on Thursday.
Earnings reports are numerous this week as well. Notable reports include:
Monday: McDonald’s Corporation, Caterpillar Inc., and Palantir Technologies.
Tuesday: Eli Lilly and Company, Toyota Motor Company, Chipotle Mexican Grill and Amgen Inc.
Wednesday: Alibaba, The Walt Disney Company, Uber Technologies, PayPal Holdings, and Yum Brands.
Thursday: S&P Global, Philip Morris International, and Duke Energy Corporation.
Friday: PepsiCo, Enbridge, and Honda Motor Co.
Broad Market Update
Following last week’s FOMC meeting, equities first experienced a decent little sell-off, which was followed by aggressive buying into the end of the week, pushing stock indexes to new all-time highs.
I am definitely erring on the more cautious side in stocks, as this rally has pushed higher without any significant pullbacks for three months now. However, that is not a reason to go and short this market, as the price action is clearly still pointing higher. Additionally, for investors holding on to winning stocks, it might be worth bumping up those trailing stops for when the market does inevitably correct.
I am watching this upward trending channel in the S&P 500 (SPY - Free Report) (similar setup in the Nasdaq 100) to gauge sentiment. If the market can break below the lower bound, I will get much more defensive, although a test of 5,000 first feels highly likely.
Image Source: TradingView
There were some significant developments at last week’s FOMC meeting, as Jerome Powell further tempered interest rate cut expectations. Considering the persistent strength in the labor and wage market, the committee made more clear that the odds of a rate hike in March are falling.
The futures market reflects that, and in the FedWatch tool below, we can see that the odds of a March rate cut have fallen from 64% a month ago, to just 17% now. Odds of a May rate cut now stand at 60%.
Slightly more hawkish rhetoric from the Fed, and thus higher interest rates could act as a headwind for stocks between now and the next meeting in mid-March.
Image Source: CME Group
Technical Setups
Following the trend over the last few weeks, I will share four trading setups. The first two represent stocks with a more aggressive tilt, that should outperform if the market continues to rally, and the other two are more defensive, and should outperform if the market begins to correct.
Netflix (NFLX - Free Report) has formed a compelling bull flag following a strong earnings gap up. If Netflix stock can trade and close above the $570 level, it would signal a technical breakout. Alternatively, if the share price of Netflix breaks down below the $561 level of support, the setup is invalid, and investors may want to seek opportunities elsewhere.
Image Source: TradingView.com
CrowdStrike (CRWD - Free Report) , the cybersecurity firm has a very nice technical setup as well. Over the last two weeks, the stock has built a clean bullish consolidation. If CrowdStrike stock can trade and close above the $305 level, it would signal a breakout. However, below the $290 level of support and the setup is invalid.
Image Source: TradingView
The Progressive (PGR - Free Report) stock has been on a tear since mid-way through 2023, barely ticking down since then. The stock continues to build bullish patterns, and over the last nine days has formed a clean bullish consolidation. A break above $181.50 should send the stock to another new high, but below $176, and it should be avoided.
Image Source: TradingView
Finally, Textron (TXT - Free Report) , an aerospace manufacturer, has formed a compelling bullish pattern after a strong earnings gap up. Above $86.50 and the stock should make a swift move higher. Alternatively, a break below $84.50 would invalidate the setup.
Image Source: TradingView
Bottom Line
Even the best trading setups fail, so it is always important for traders to prioritize making a trading plan, following the plan, and utilizing strict risk management protocols.
Good luck this week traders!