Market Analysis and Insights: A Weekly Review
Hello everyone, and welcome to a professional U.S. stock market channel. This week, we'll delve into various market trends and strategies. We'll cover Powell's recent testimony, my personal trading activities (including a post-market move on Tuesday), the significant drop in Circle's stock price, and FedEx's earnings report and what it tells us about the broader economic environment.
Market Performance Overview
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Dollar Index: Down 0.6% on Tuesday and 1% over the past week.
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Treasury Yields: 2-year and 10-year yields decreased by 4 and 5 basis points respectively on Tuesday. Over the past week, they fell by 13 and 9 basis points.
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TLT (iShares 20+ Year Treasury Bond ETF): Rebounded by 0.7% on Tuesday and 1% over the past week.
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Major Indices: All three major indices performed well, rising 1%, 1.4%, and 1.2% respectively on Tuesday. Weekly gains approached 2%.
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Commodities: Gold and oil prices declined on Tuesday, potentially due to easing tensions between Iran and Israel.
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VIX (Volatility Index): Experienced a substantial decrease of 2%.
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Russell 2000: Rebounded by 1.3% on Tuesday and 2.8% over the past week.
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Bitcoin: Rose 2.3% on Tuesday.
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Chip Sector: Surged 3.8% on Tuesday, recovering significantly from a challenging April. Year-to-date, the chip sector's gain has reached 9.1%, placing it third among all sectors.
My Recent Trade: Adding to Apple (AAPL)
On Tuesday, I increased my position in Apple. The YTD performance of the top seven tech stocks shows Meta with the best performance at 22%, followed by Microsoft at 16%. Apple's YTD performance is the worst, down 20%.
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Long-Term Investment: Apple is a long-term investment for me, and I may make some technical trades along the way.
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AI and Stablecoins: I've been thinking about the combination of stablecoins and AI agents.
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Operating System Advantage: I believe Apple's operating system will allow their AI agent app access to user data, unlike other AI apps.
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Valuation: Apple's current valuation is in a fair range compared to the past five years.
Circle (CRCL) Stock Analysis
Circle's stock experienced a significant drop on Tuesday.
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Key Support Level: The $245 level acted as a strong support, but it was broken on Tuesday afternoon.
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Potential Rebound Areas: The $200 level (gap below) and $133 level (another gap) are potential areas for a rebound.
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RSI Indicator: I'll be watching the hourly RSI (Relative Strength Index) for oversold signals near $200. If both 15-minute and hourly charts indicate oversold conditions, it could be a strong buy signal.
Powell's Testimony and Interest Rate Expectations
Powell's recent testimony highlighted the importance of the next two months' inflation data in determining the impact of tariffs on inflation.
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Inflation Data: Powell indicated that the inflation data from June and July will be crucial in deciding whether to cut interest rates in September.
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My Prediction: I predict that if the next two months' inflation data is below 0.3% month-over-month, a 25-basis point cut is likely in September. If the data is below 0.2%, a 50-basis point cut is possible.
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Market Expectations: The market currently anticipates one rate cut in September but has increased expectations for cuts in 2025.
Market Risks: Mid-Term and Short-Term
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Mid-Term (3-6 Months): The main risks are related to economic data, including GDP, unemployment, and inflation.
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Short-Term: Concerns include a blackout period for company stock buybacks in July and potential U.S. Treasury debt issuance, which could put upward pressure on yields.
Market Participation Update
The market participation has rebounded.
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Previous Observations: When market participation was around 40%, I noted that the market was undergoing a healthy correction beneath the surface.
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Current Status: The S&P 500 participation has returned to 70%, the Russell 2000 to 66%, and the Nasdaq to 56%.
FedEx (FDX) Earnings Report
FedEx released its earnings report after Tuesday's close, leading to a decline in the stock price.
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Cautious Outlook: The company provided a weaker-than-expected outlook for the next quarter and did not provide guidance for the next fiscal year, citing macroeconomic uncertainty.
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Cost Cutting: FedEx has been focusing on cost reduction, including capital expenditure cuts and share buybacks/dividends.
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Economic Concerns: FedEx sees a weak demand environment, especially in the industrial sector, and significant macroeconomic uncertainty. The demand has decreased by 20% from April, due to the trade war.
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Waiting for Clarity: Management is waiting for a clearer macroeconomic picture before providing full-year guidance.
I am unsure if FedEx's report is representative of the entire economy. I am looking forward to the upcoming Bank of America earnings report to gauge the current state of consumer spending after tariffs and other factors.
Futu MooMoo Promotion
Futu MooMoo is offering a promotion.
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US Market: New users who deposit $5,000 receive 30 free shares of stock and one free share of Nvidia.
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Canadian Market: New users who deposit $5,000 CAD receive a $300 CAD cash reward and 90 days of commission-free trading.
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