Weekly Stock Market Update & SPY Technical Analysis
This week marks the beginning of June…if you’re a kid in school, you’re looking forward to summer break, but if you’re an investor, you only have one thing on your mind…FOMC is only two weeks away. And while FOMC is a normal event on the market, this one is different.
The Federal Reserve’s FOMC meeting that’s scheduled for mid-June is Kevin Warsh’s first since he became Chairman of the Fed. With Jerome Powell’s eight year leadership coming to an end, the market is eager, but nervous to hear what Warsh has to say. We wrote a section on Kevin Warsh in last week’s analysis, here’s a link for reference:
What we Know about Kevin Warsh
This Week’s Stock Market Focus Points
- Oil prices / geopolitics: the situation between the U.S. and Iran is seemingly improving, with odds of a new agreement now at 69% by June 30th (only 37% by June 7th) per Polymarket. The accuracy of this is obviously skewed, but sentiment does seem to be improving. Oil prices fell sharply last week, which lowers fears of energy inflation, but it’s worth noting that oil is still extremely expensive compared to where it was prior to the conflict.
- Labor market: this week is filled with key labor market data, including: private payrolls, U.S. productivity, U.S. wages, unemployment rate…etc. The most important report is the U.S. unemployment rate, which is projected to remain unchanged at 4.3%. We’ll be digging into the numbers to find out which industries are hiring / firing…this helps us create an investment these around industries that are growing / shrinking.
We’ll be sharing daily updates on the reports as they’re released, including the key takeaways in our morning updates.
June’s Stock Market Outlook
Markets do tend to move in timeframes…often times we see a stock or industry either moving in for one week, one month, one quarter, before changing course or slowing down. The hottest industry since April 1st has been the semiconductor industry…just look at $SMH, which began its rally at the start of April and has nearly doubled to end May. But now that we go into a new month, the question becomes, will semiconductors like AMD, Broadcom, ARM, Intel, Texas Instruments…etc. manage another month of gains to make it a strong quarter…or will they slowdown here?
Chances are, we may see an attempt for a bit more push from some individual stocks in the space, but with the Fed’s FOMC scheduled in mid-June, nerves are likely too high for investors not to begin scaling back.
But the money doesn’t sit idle. Late last month, we already started noting the industries that are starting to see capital flows while technology / semiconductor stocks are stalling at record highs. We’ve included many of the stocks that appear to be gaining momentum in our weekly watchlist.
SPY Technical Analysis
With a pull back from technology / semiconductor stocks on the horizon, SPY’s rally is beginning to look a bit audacious. We love a bullish market, especially when our favorite tech stocks rally, but we’ve already noted that the real opportunity going forward may be in the small / mid cap markets, as well as emerging markets. If SPY stalls, capital is likely to flow to these other parts of the market.