Weekly Market Recap (Aug 4-8): Markets Rebound As Bears Failed To Follow Through
Everything you need to know about last week's markets performance and what to expect next.
Dear readers,
Welcome back to My Weekly Stock, where in-depth market analysis meets proven momentum-based trading strategies. My mission? To help you win in the markets with unbiased, data-driven insights you can act on.
Friday means it's time to review the week in the markets. Each week, I dedicate hours to curating this market recap, preparing insightful analysis with clear visuals and a structured layout, making it easy for you to find exactly what you need, week after week. And because it's easy to get swayed by personal bias, I like to let the data do most of the talking.
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Let's dive in!
SUMMARY
Here are this week's highlights and what to look out for next:
1. The markets were positive this week, with the S&P 500 up 2.4%, the Nasdaq 3.9%, and the Dow Jones 1.4%. Consumer Cyclical (+3.6%) and Technology (+3.4%) were the best-performing sectors.
2. The S&P 500's long-term trend is positive, and the short-term momentum is mostly positive. 6,425 is the next resistance, while 6,270 is support.
3. The Q2 earnings season is underway and 452 companies from the S&P 500 index have released their quarterly results, with 80% beating estimates. Earnings are expected to be up 13% in Q2 and 10% in 2025.
4. Market sentiment is at the "Greed" level (59/100) as measured by CNN’s Fear & Greed indicator, while VIX is at a low value of 15.
5. Earnings report from Cisco and Applied Materials, CPI and PPI reports, and Retail Sales data are scheduled for next week.
My take:
Last week’s sell-off saw no follow-through as the S&P 500 stayed all week a fair distance from last Friday’s low. Importantly, the index reclaimed its 21-day EMA as early as Monday and close the week a few inches from its all-time high, suggesting bulls aren’t done yet with the April rally.
That said, we remain range-bound, with all-time highs and last Friday’s low acting as upper and lower boundaries. We could easily keep ping-ponging between those levels for a while. While my long-term outlook remains bullish, I don’t feel we’ve had enough of a reset to truly fuel another strong short-term leg higher. Still, as long as we stay above the short-term trend line, I’ll keep riding the trend.
PERFORMANCE RECAP
1. S&P 500 Sector Performance
This week, 8 out of the 11 S&P 500 sectors posted gains. Consumer Cyclical led the market with a 3.6% increase, while Energy was the laggard, dropping 0.8%.
Year-to-date, 8 sectors have achieved positive performance. Industrials is the top-performing sector with a 14.5 % gain, while Health Care lags behind, with a 5.4 % loss.
2. S&P 500 Top & Worst Performers
Over the last five trading days, 63% of the stocks in the S&P 500 index rose in value.
Top Performers:
$IDXX (Idexx Laboratories, Inc): 22.9%
$PLTR (Palantir Technologies Inc): 21.2%
$ANET (Arista Networks Inc): 18.4%
$AXON (Axon Enterprise Inc): 13.5%
$MU (Micron Technology Inc): 13.4%
Worst Performers:
$VRTX (Vertex Pharmaceuticals, Inc): -20.7%
$SMCI (Super Micro Computer Inc): -21.3%
$FTNT (Fortinet Inc): -23.6%
$IT (Gartner, Inc): -30.3%
$TTD (Trade Desk Inc): -37%
In addition, 56 stocks within the S&P 500 reached a new 52-week high, while 28 stocks set new lows. The majority of this week’s highs came from the Utilities sector.
Notable Highs:
$NVDA (NVIDIA Corp)
$AVGO (Broadcom Inc)
$PLTR (Palantir Technologies Inc)
$JNJ (Johnson & Johnson)
$GE (GE Aerospace)
Notable Lows:
$LLY (Lilly(Eli) & Co)
$ACN (Accenture plc)
$VRTX (Vertex Pharmaceuticals, Inc)
$CL (Colgate-Palmolive Co)
$ELV (Elevance Health Inc)
MARKET MOMENTUM
1. Momentum Review
To evaluate the market's current health, I examine 4 key elements: performance, breadth, trends, and key levels. Healthy bull markets typically feature indices setting new highs, broad market participation, and ascending trend lines.
Performance (POSITIVE 🟢): evaluating recent market performance to gauge the momentum’s strength. Ideally i want to see returns accelerating short-term and index trading less than 5% from its 1-year high
1-month performance: +1.8% 🟢
3-month performance: +12.8% 🟢
vs. 1-year high: -0.4%🟢
Breadth (MIXED 🟡): assessing market participation to understand the health of the trend. Extreme levels (above 80% or below 20%) may indicate overextended trends.
% of stocks above 200-day moving average: 56% (up from 54% last week) 🟢
% of stocks above 20-day moving average: 48% (up from 36% last week) 🟡
Trends: analyzing trend strength across multiple timeframes using exponential moving averages, scored on a scale of 1 to 5. A score of 3 or above suggests solid trends and supports holding a position.
Weekly chart: VERY STRONG ⭐️⭐️⭐️⭐️⭐️ (stable vs last week)
Daily chart: STRONG ⭐️⭐️⭐️⭐️ (improving vs last week)
4-hour chart: SOLID ⭐️⭐️⭐️ (improving vs last week)
Key levels: identifying critical price zones to confirm the current trend or signal a potential reversal.
Support:
6,050 (-5.3%)
6,200 (-3.0%)
6,270 (-1.9%)
Resistance:
6,425 (+0.6%)
6,500 (+1.7%)
2. Post of the Week
This week's momentum analysis is about the Mega Caps. Using a combination of performance metrics and technical indicators, I've developed a proprietary algorithm to rank 10 mega-cap stocks. Based on this approach, I've identified Nvidia (NVDA), Microsoft (MSFT) and Meta (META) as having the best relative momentum currently.
EARNINGS & ECONOMIC REPORTS RECAP
1. Economic Reports
It was a relatively calm week for economic data, with attention centered on fresh PMI readings for July and weekly labor market figures.
Key reports included:
ISM Non-Manufacturing PMI (Tue): Fell to 50.1, below the forecast (51.5) and just above the contraction threshold.
ISM Non-Manufacturing Prices (Tue): Increased to 69.9, above expectations (66.5) and up from 67.5, indicating stronger input price pressures.
Initial Jobless Claims (Thu): Came in at 226K, slightly above the forecast (221K) and higher than the previous week’s 219K.
2. Earnings Outlook
Q2 Earnings: S&P 500 earnings are expected to grow by 13%, rising to 15% when excluding the energy sector.
2025 Full-Year Outlook: Earnings are expected to increase by 10%, slightly above the 10-year average growth of 9%.
Analyst Revisions: Over the past month, 67% of all earnings revisions by analysts have been upward adjustments to their outlook.
Valuation: The forward 4-quarter P/E ratio stands at 22.4, above the 5-year and 10-year historical averages.
3. Earnings Season Recap
Out of the 452 S&P 500 companies that have reported second-quarter earnings, 80% exceeded EPS expectations. It is above with the four-quarter average of 77% and above the historical average of 67%.
Below are some notable companies that reported earnings last week. I’ve highlighted their EPS and revenue performance vs estimate, as well as their stock return this week.
One highlight of the week was Palantir ($PLTR), which posted a strong report, with a double beat on Revenue and EPS. The stock gained 21% for the week.
MARKET SENTIMENT
Measures of investor sentiment can be helpful as they provide insight into the views and opinions of professional or individual investors. While not definitive predictors of market direction, these measures can serve as a valuable complement to other indicators and analysis tools, helping to paint a more comprehensive picture of the market's current state.
1. AAII Sentiment Survey (Individual Investors)
The American Association of Individual Investors (AAII) conducts a weekly survey to gauge members' expectations for the stock market over the next six months. Results are published every Wednesday.
In the latest survey, 35% of respondents had a bullish outlook, down from 40% the previous week.
2. BofA Bull & Bear Indicator (Institutional Investors)
The Bank of America Bull-Bear Indicator measures investor sentiment based on fund managers' and institutional investors' views. Scores range from 0 (extremely bearish) to 10 (extremely bullish).
The most recent reading was 6.3, a slightly bullish sentiment reading.
3. CNN Fear & Greed Index (Technical)
This daily measure analyzes seven indicators to assess how emotions drive market decisions. Scores range from Extreme Fear to Extreme Greed.
The index closed at 59 (Greed), up from 49 last Friday.
THE WEEK AHEAD
1. Economic Calendar
It’s shaping up to be an important week, with inflation and consumer spending data taking center stage. Markets will be watching closely for signs of whether price pressures are cooling and how resilient U.S. consumers remain.
Key events to watch:
Consumer Price Index (Tue): Headline CPI is expected to rise 0.2% MoM in July, with the YoY rate seen at 2.8%. Core CPI is forecast at 0.3% MoM, suggesting underlying inflation remains firm.
Producer Price Index (Thu): PPI is expected to increase 0.2% MoM in July, matching last month’s gain.
Retail Sales (Fri): Core retail sales are forecast to rise 0.2% MoM, with overall sales also expected up 0.5%. The data will test the strength of consumer demand in July.
2. Earnings Calendar
The earnings season continues and 6 companies from the S&P 500, including Cisco and Applied Materials, are expected to release their quarterly results.
Below are notable stocks reporting earnings next week, along with several key indicators I like to monitor:
3-Month Performance: Assessing recent stock trends.
RSI (Relative Strength Index): A reading above 70 suggests overbought conditions, while below 30 indicates oversold.
P/E Ratio: A value below 25 often points to a "cheap" valuation or low growth expectations.
Implied Volatility: The options market's forecast for the expected 1-day stock move after earnings.
3. Stock Analysis of the Week
Every week, I share my analysis of 1 stock that has reported earnings in recent weeks, focusing on implications for long-term investors. This week, I prepared an analysis of Apple ($APPL).
👨💻 My View: WATCH
While Apple has bounced since its April low, it has lagged the broader market and remains a far cry from its 1-year high.
This week finally brought some strong price action, with a potential momentum shift as the stock firmly reclaimed its 30-week EMA, my favorite long-term trend line.
We still have some important overhead resistance to overcome next. Still, if bulls follow through, Apple may finally start catching up to the other mega caps.
Check out the post for more details about $AAPL performance, trend and key levels.
Community Spotlight
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CONCLUSION
Thank you for reading my Weekly Market Recap, which, I hope, got you ready for the week ahead.
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Happy investing!
My Weekly Stock
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The information provided in this newsletter is for informational purposes only and should not be taken as financial advice. Any investments or decisions made based on the information provided in this newsletter are the reader's sole responsibility. We recommend that readers conduct their own research and consult a qualified financial professional before making investment decisions. The author does not assume any responsibility for any losses or damages arising from using the information provided in this newsletter.