Weekly Market Review - Week of September 29, 2024
Market Overview
The market for the week of September 29, 2024, shows an uptrend across major indices including the S&P 500, Nasdaq, and Russell. Short-term (hourly and daily) trends are up, with prices hovering around the mean. However, there are signs of exhaustion, particularly in the S&P 500, where key indicators suggest the potential for a pullback next week.
Price Action and Trends
Last week's price action indicated a slowdown, and the S&P 500 is showing signs of exhaustion. Indicators like the MACD (Moving Average Convergence Divergence) are slowing down, suggesting that the price action may experience a choppy downturn. The Fast Day Trading System (FDTS) is signaling a closer breakdown, which indicates potential volatility in the coming days.
While the short-term trends remain up, the market could face some downside risk, especially if prices continue to trend below the mean. The Nasdaq and Russell are following similar trends, with possible choppiness in the near term. For next week, there is a strong chance of a choppy to down price movement.
Weekly Index Projections
| Index | Upside | Downside | Deviation |
|---|---|---|---|
| S&P 500 (SPX) | 5832 | 5647 | 92.5 |
| NASDAQ (NDX) | 20407 | 19606 | 400.5 |
| Russell | 2274 | 2174 | 50.0 |
Market Correlation Analysis
Correlation between S&P 500 and Nasdaq remains high at 80%, indicating that these indices are likely to move in the same direction. However, Russell’s correlation to S&P 500 is lower at 54%, meaning that the small-cap index may diverge from the broader market.
- Volatility (VIX): Negatively correlated with S&P 500 at 68%.
- Bonds: 23% positively correlated with S&P 500, showing some connection between the two markets.
- Gold: 65% positively correlated, while oil is inversely correlated at 18%.
- Bitcoin: 27% positively correlated, showing a weaker relationship with traditional markets.
- Copper: 58% positively correlated and serves as a leading indicator, showing signs of a potential downturn in the near term.
Market Sentiment and Internals
The market sentiment is currently in the greed territory, with internals showing 68% in greed. This is a slight decline from the previous close of 71%, and significantly higher than the level of 63% from a year ago. The sentiment is expected to move towards neutrality, around 50%, in the upcoming week as market volatility increases.
Overall market breadth is showing signs of weakness, with key indicators pointing to a possible downturn. The MACD is crossing downwards, and market exhaustion could lead to choppy price action or a pullback.
Market Outlook for Next Week
Looking ahead, the market is expected to remain volatile, with choppiness likely in both the S&P 500 and Nasdaq. While there is potential for further upside, it is essential to remain cautious as the market shows signs of exhaustion. For long-term investors, pullbacks may offer buying opportunities, especially as the market trends downward in the short term.
Key economic reports such as CPI, PPI, and jobless claims will play a significant role in determining the market’s direction next week. Investors should be prepared for increased volatility and a potential shift towards a more neutral or even bearish sentiment in the near future.