Weekly Market Recap (Jul 21-25): The Melt-Up Continues, But Can the Rally Survive the Big Week Ahead?
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 1.5%, the Nasdaq 1%, and the Dow Jones 1.3%. Health Care (+3.5%) and Materials (+2.4%) were the best-performing sectors.
2. The S&P 500's long-term trend is positive, and the short-term momentum is also positive. 6,425 is the next resistance, while 6,260 is support.
3. The Q2 earnings season has started and 168 companies from the S&P 500 index have released their quarterly results, with 80% beating estimates. Earnings are expected to be up 8% in Q2 and 9% in 2025.
4. Market sentiment is at the "Extreme Greed" level (74/100) as measured by CNN’s Fear & Greed indicator, while VIX is at a low value of 15.
5. Earnings report from Apple, Meta, Microsoft and Amazon, the Fed meeting, PCE price index data and Non-Farm Payroll report are scheduled for next week.
My take:
Another week, another high for the melt-up of the main U.S. index continues. The S&P 500 is now approaching the 6,400 mark, up more than 30% since the April low. One must acknowledge the impressive four-month rally.
Yes, the trend is extended, and after such a sharp and long move, it’s reasonable to assume we may be closer to the end than the beginning. But melt-ups and strong trends can last longer than expected. So, there’s no need to fight the trend, at least not until it turns.
Next week could bring more volatility, with a packed schedule that includes earnings reports, a Fed meeting, inflation data, job numbers, and the looming August trade deadline. It won’t be easy to navigate, but once again, I’ll let momentum be my compass and continue riding the trend while it lasts.
PERFORMANCE RECAP
1. S&P 500 Sector Performance
This week, 11 out of the 11 S&P 500 sectors posted gains. Health Care led the market with a 3.5% increase, while Technology was the laggard, still gaining 0.4%.
Year-to-date, 10 sectors have achieved positive performance. Industrials is the top-performing sector with a 17.6 % gain, while Health Care lags behind, with a 0.8 % loss.
2. S&P 500 Top & Worst Performers
Over the last five trading days, 75% of the stocks in the S&P 500 index rose in value.
Top Performers:
$WST (West Pharmaceutical Services, Inc): 25%
$LW (Lamb Weston Holdings Inc): 24.2%
$IQV (IQVIA Holdings Inc): 24%
$TEL (TE Connectivity plc): 16.3%
$BKR (Baker Hughes Co): 15.9%
Worst Performers:
$CMG (Chipotle Mexican Grill): -13.3%
$LKQ (LKQ Corp): -13.3%
$FI (Fiserv, Inc): -14.3%
$TXN (Texas Instruments Inc): -14.6%
$CHTR (Charter Communications Inc): -18.9%
In addition, 69 stocks within the S&P 500 reached a new 52-week high, while 16 stocks set new lows. The majority of this week’s highs came from the Industrials sector.
Notable Highs:
$AVGO (Broadcom Inc)
$JPM (JPMorgan Chase & Co)
$JNJ (Johnson & Johnson)
$WFC (Wells Fargo & Co)
$RTX (RTX Corp)
Notable Lows:
$LMT (Lockheed Martin Corp)
$FI (Fiserv, Inc)
$ELV (Elevance Health Inc)
$OTIS (Otis Worldwide Corp)
$LULU (Lululemon Athletica 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: +4.9% 🟢
3-month performance: +16.5% 🟢
vs. 1-year high: -0.2%🟢
Breadth (POSITIVE 🟢): 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: 64% (up from 58% last week) 🟢
% of stocks above 20-day moving average: 69% (up from 58% 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: VERY STRONG ⭐️⭐️⭐️⭐️⭐️ (stable vs last week)
4-hour chart: VERY STRONG ⭐️⭐️⭐️⭐️⭐️ (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%)
6,175 (-3.3%)
6,260 (-2.09%)
Resistance:
6,425 (+0.6%)
6,490 (+1.6%)
6,700 (+4.9%)
2. Post of the Week
This week's momentum analysis focuses on extended trends in the S&P 500, employing the Relative Strength Index (RSI) to filter stocks. The RSI is a valuable tool for spotting stocks that are potentially "oversold" (RSI below 30) or "overbought" (RSI above 70). Although I wouldn't rely solely on RSI, it helps identify stocks in extended trends that may be approaching a turning point.
EARNINGS & ECONOMIC REPORTS RECAP
1. Economic Reports
It was a relatively quiet week for data. Key reports were the S&P Global PMIs (Thu). The data sent mixed signals. Manufacturing PMI fell to 49.5, down from 52.9 and below the 50-threshold, pointing to renewed contraction. On the other hand, Services PMI jumped to 55.2, well above the prior 52.9 and beating expectations (53.0), signaling strong expansion in the services sector.
2. Earnings Outlook
Q2 Earnings: S&P 500 earnings are expected to grow by 8%, rising to 10% when excluding the energy sector.
2025 Full-Year Outlook: Earnings are expected to increase by 9%, in line with the 10-year average growth of 9%.
Analyst Revisions: Over the past month, 61% of all earnings revisions by analysts have been upward adjustments to their outlook.
Valuation: The forward 4-quarter P/E ratio stands at 22.6, above the 5-year and 10-year historical averages.
3. Earnings Season Recap
Out of the 168 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 Alphabet ($GOOG), which posted a strong report, with a double beat on Revenue and EPS. The stock gained 4% 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, 37% of respondents had a bullish outlook, down from 39% 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 74 (Extreme Greed), down from 75 last Friday.
THE WEEK AHEAD
1. Economic Calendar
It will be a packed week, arguably the most important of the summer, with key events spanning the Fed’s July policy meeting, new inflation data, and the always closely watched U.S. jobs report.
Key events to watch:
FOMC Meeting (Wed): The Fed is widely expected to keep rates unchanged at 4.50%, but markets will be paying close attention to the statement and Powell’s press conference for any shift in tone or forward guidance.
Core PCE Price Index (Thu): The Fed’s preferred inflation gauge. Last month’s reading showed +0.2% MoM and +2.7% YoY, indicating sticky but stable price pressures.
Nonfarm Payrolls (Fri): The labor market added 147K jobs in June. Investors will be watching the July figures closely to assess whether momentum is holding or cooling.
Average Hourly Earnings (Fri): Wages rose 0.2% MoM last month, a key input for inflation expectations.
Unemployment Rate (Fri): Held steady at 4.1% in June.
2. Earnings Calendar
The earnings season is picking up steam and 162 companies from the S&P 500, including Apple, Meta, Microsoft and Amazon, 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 Netflix ($NFLX).
👨💻 My View:
Netflix has been one of the most reliable market leaders for nearly two years, showing remarkable resilience during the broad Q1 weakness.
However, the stock has entered a more challenging phase. It's currently on track for a fourth straight weekly loss, and last week's earnings didn't help reverse the downtrend.
While I'm giving it the benefit of the doubt for now, the pullback may not be over yet. A retest of the 30-week EMA, currently near 1,180, seems likely. The MACD is on the verge of turning bearish, another signal to proceed with caution and watch price action closely.
Check out the post for more details about $NFLX performance, trend and key levels.
Community Spotlight
This week, I'm glad to feature Jacob B , writer of The J. Nicholas. His newsletter is all about quality investment insights. Stock analysis, deep dives, and weekly write-ups on one major story in the markets. He focuses on investing in high-quality businesses with accelerating free cash flow per share growth, buying amazing businesses at low prices, and holding them for years as they generate returns. Check him out!
CONCLUSION
Thank you for reading my Weekly Market Recap, which, I hope, got you ready for the week ahead.
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Thanks again, and I look forward to sharing my market recap with you next week.
Happy investing!
My Weekly Stock
DISCLAIMER
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.
Very thorough recap indeed!
Thank you for the shoutout!