Weekly Market Recap (Mar 24-28): Market Fails to Clear Key Trend Line. More Downside Ahead?
Everything you need to know about last week's markets performance and what to expect next.
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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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SUMMARY
Here are this week's highlights and what to look out for next:
1. The markets were negative this week, with the S&P 500 down -1.5%, the Nasdaq -2.6%, and the Dow Jones -1%. Consumer Defensive (+1.4%) and Energy (+-0.1%) were the best-performing sectors.
2. The S&P 500's long-term trend is mixed, and the short-term momentum is weak. 5,675 is the next resistance, while 5,500 is support.
3. The Q4 earnings season is over and all the companies from the S&P 500 index have released their quarterly results, with 74% beating estimates. Earnings are expected to be up 17% in Q4 2024 and 11% in 2025.
4. Market sentiment is at the "Extreme Fear" level (22) as measured by CNN’s Fear & Greed indicator, while VIX is at a high value of 22.
5. The latest PMI data and the Non-Farm Payroll report are scheduled for next week.
My take:
We had a promising setup after hitting a potential swing low two weeks ago. However, I remained cautious until we could firmly go back above the 21-day EMA, my go-to short-term trend line. The week started on a positive note, clearing the 5,700 level and even breaking above the 21-day EMA. But we failed to hold on to it and ended the week with a steep sell-off.
That's definitely concerning, but as long as we're above 5,500, there's still hope for another (late) save. However, with the long-term trend flashing warning signals, time is running out for the bulls.
PERFORMANCE RECAP
1. S&P 500 Sector Performance
This week, 1 out of the 11 S&P 500 sectors posted gains. Consumer Defensive led the market with a 1.4% increase, while Technology was the laggard, dropping 3.5%.
Year-to-date, 7 sectors have achieved positive performance. Energy is the top-performing sector with a 7.9 % gain, while Consumer Cyclical lags behind, with a 12.1 % loss.
2. S&P 500 Top & Worst Performers
Over the last five trading days, 44% of the stocks in the S&P 500 index rose in value.
Top Performers:
$WRB (W.R. Berkley Corp): 12.7%
$DLTR (Dollar Tree Inc): 9%
$UHS (Universal Health Services, Inc): 6.9%
$KMX (Carmax Inc): 6.6%
$CTAS (Cintas Corporation): 6.3%
Worst Performers:
$VST (Vistra Corp): -8.8%
$LVS (Las Vegas Sands Corp): -8.9%
$LULU (Lululemon Athletica inc): -9.2%
$GEV (GE Vernova Inc): -9.3%
$AVGO (Broadcom Inc): -11.8%
In addition, 20 stocks within the S&P 500 reached a new 52-week high, while 24 stocks set new lows. The majority of this week’s lows came from the Consumer Cyclical sector.
Notable Highs:
$CVX (Chevron Corp)
$GE (GE Aerospace)
$RTX (RTX Corp)
$ICE (Intercontinental Exchange Inc)
$MCK (Mckesson Corporation)
Notable Lows:
$NKE (Nike, Inc)
$REGN (Regeneron Pharmaceuticals, Inc)
$FDX (Fedex Corp)
$NXPI (NXP Semiconductors NV)
$TGT (Target Corp)
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 (WEAK 🔴): 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: -5.0 🔴
3-month performance: -7.6% 🔴
vs. 1-year high: -9.4% 🟡
Breadth (WEAK 🔴): 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: 40% (down from 41% last week) 🔴
% of stocks above 20-day moving average: 37% (up from 33% 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: MIXED ⭐️⭐️ (stable vs last week)
Daily chart: WEAK ⭐️(stable vs last week)
4-hour chart: WEAK ⭐️ (stable vs last week)
Key levels: identifying critical price zones to confirm the current trend or signal a potential reversal.
Support:
$5,190 (-7.0%)
$5,410 (-3.1%)
$5,500 (-1.5%)
Resistance:
$5,675 (+1.7%)
$5,785 (+3.7%)
$5,850 (+4.8%)
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2. Post of the Week
This week's momentum analysis is about Food & Beverage Chains. Using a combination of performance metrics and technical indicators, I've developed a proprietary algorithm to rank various stocks in this industry and identify potential outperformers. Based on this approach, I've identified the Yum Brands as having the best relative momentum currently.
EARNINGS & ECONOMIC REPORTS RECAP
1. Earnings Outlook
Q4 Earnings: S&P 500 earnings are expected to grow by 17%, rising to 21% when excluding the energy sector.
2025 Full-Year Outlook: Earnings are expected to increase by 11%, above the 10-year average growth of 9%.
Analyst Revisions: Over the past month, 38% of all earnings revisions by analysts have been upward adjustments to their outlook.
Valuation: The forward 4-quarter P/E ratio stands at 21.2, above the 5-year and 10-year historical averages.
2. Earnings Season Recap
Out of 500 S&P 500 companies that have reported fourth-quarter earnings, 74% exceeded EPS expectations. It is slightly below with the four-quarter average of 78% but 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 Lululemon, which topped Revenues and EPS estimates. However, the stock still lost 9% for the week.
3. Economic Reports
Here are this week’s key economic reports:
Q4 GDP (Thu): Actual of 2.4% vs forecast of 2.3% and previous: 3.1%. GDP growth was slightly better than expected but lower compared to the previous quarter.
Core PCE Price Index (Fri): Year-over-year of 2.8%, vs forecast of 2.7% and previous of 2.7%. Core PCE, the Fed's preferred inflation gauge, came in slightly higher than forecasted, indicating persistent inflation pressures.
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, 27% of respondents had a bullish outlook, up from 22% 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 5.3, a neutral sentiment.
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 22 (Extreme Fear), down from 22 last Friday.
THE WEEK AHEAD
1. Economic Calendar
Here are the key reports for the upcoming week:
ISM Manufacturing PMI (Tue): Forecast at 50.3 (unchanged from previous). This report will be crucial to gauge the health of the U.S. manufacturing sector.
ISM Non-Manufacturing PMI (Thu): Forecast at 53 (slightly down vs 50.5 from previous).
Nonfarm Payrolls (Fri): Forecast: 151K (previous month 128K) and unemployment rate forecast at 4.1% (previous 4.2%). A critical employment report, closely watched for labor market strength signals.
Fed Chair Powell Speech (Fri): Markets will carefully monitor Powell's remarks for clues on future monetary policy moves and economic outlook.
2. Earnings Calendar
Earnings season is over and the next season will kick off the week after.
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 Nike ($NKE).
👨💻 My View: PASS
Nike continues to trend lower, down more than 60% from its 2021 highs. Every bounce has been short-lived, and the 30-week EMA (in yellow in the graph) has consistently acted as resistance for over a year now.
The stock broke to fresh lows again, its lowest level since COVID. There's simply no bullish momentum here, and it remains so until we stop the pattern of lower highs.
While it might be tempting to bottom-fish here, the trend remains your enemy if you are on the long side here.
Check out the post for more details about $NKE performance, trend and key levels.
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
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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.