S&P 500 Regains Its Uptrend | Mary Ellen McGonagle | The MEM Edge (04.28.23)

Introduction

The host welcomes the audience and introduces the show.

Broader Markets Overview

The host provides an overview of the broader markets, including a request for a more defined view. She also discusses headline news that drove price action last week.

Market News

• Consumer confidence dropped to a nine-month low due to high inflation.

• Earnings releases were the primary driver of stocks with big moves.

• Small cap stocks experienced the most recovery from Wednesday to Friday.

Economic Indicators

• Durable goods orders showed a slowing down in business investments.

• Core personal consumption expenses (PCE), which excludes energy and food, is still elevated and being termed sticky.

• Next week's Federal Reserve meeting will be important as it will determine interest rate hikes and potential future monetary policy shifts. Employment data for April is also due out next week.

S&P 500 Analysis

The host analyzes the S&P 500 daily price chart, discussing recent trends and momentum indicators.

Recent Trends

• Mega cap Fang stocks had robust earnings reports, leading to a late-week rally.

• Last week's downtrend was reversed with positive momentum indicators.

Momentum Indicators

• The faster moving stochastic indicator has turned positive.

• A critical level of upside resistance is at 4200.

Market Outlook

In this section, the speaker discusses the intermediate and longer-term outlook for the S&P 500 using weekly and monthly charts. They also discuss momentum indicators such as RSI, MACD, and Stochastics.

Intermediate Term Outlook

• The weekly chart shows positive momentum with RSI, MACD, and Stochastics in positive territory.

• The index is above the 10-week or 50-day moving average indicating a constructive outlook.

Longer-Term Outlook

• The monthly chart shows that both RSI and Stochastics are on the cusp of turning positive.

• Positive momentum indicators preceded healthy rallies coming out of previous bear markets in 2003 and 2008.

• Additional characteristics need to be present in order to give true confidence to a longer-term uptrend.

S&P Equal Weighted Index

In this section, the speaker discusses the S&P 500 equal-weighted index's health compared to the general S&P 500 index.

Current View

• The equal-weighted view is not as healthy as it should be.

• Late week rally included other areas outside of Mega-cap Bank stocks which is encouraging.

Historical Comparison

• Coming out of previous bear markets in 2009 and 2020, there was a healthy stance of this equal-weighted index.

Sector Performance Analysis

In this section, the speaker analyzes sector performance using a two-month daily price chart view sorted by RSI from strength to weakness.

Key Points

• Staples are still up in the forefront, particularly Procter and Gamble.

• Other sectors such as Technology, Healthcare, and Consumer Discretionary are also performing well.

English Market Overview

In this section, the speaker provides an overview of the market and discusses various sectors that performed well during the week.

Technology Sector

• The technology sector was the second-best performer, up 1.7% relative to a 0.7% increase in the S&P 500.

• Apple and Microsoft were among the top performers in this sector, with Microsoft up 7%.

• Other areas within tech that are beginning to bubble up include healthcare and industrials.

Healthcare Sector

• The overall healthcare group underperformed for the week but retained positive momentum.

• The speaker favors healthcare due to its defensive nature and growth potential.

• McDonald's is one of the top performers in this sector, with superior earnings and a strong uptrend.

Consumer Discretionary Sector

• Amazon and Tesla were flat for the week, but other areas within retail such as housing continued to perform well.

• Coca-Cola and Staples were among the top performers in this sector.

Industrials Sector

• The industrial sector was down 0.7%, but there is vibrancy shaping up within this space due to earnings reports.

• The Dow Jones Industrial Average was up 2.3% for April, making it the top performer for the month relative to other indices.

• Microsoft is one of the top performers in this sector, with a nice uptrend and solidifying macd crossover.

Overall, while some sectors underperformed during the week, there were still several areas that showed positive momentum and potential for growth.

Insurance and Software Stocks

In this section, the speaker discusses the insurance space and software stocks.

Insurance Space

• Travelers is a different type of insurance company.

• Gap up on earnings and a nice potential base formation coming out of that one.

• Caterpillar came out with really good numbers but the market just is not interested.

Software Stocks

• Salesforce CRM has a nice double bottom formation stock poised to break out of a base.

• Intel came out with earnings today Gap up into positive momentum there where didn't quite get this shift with that black lineup through the red just yet.

• Semiconductor stocks are trying to turn around. Nvidia from my list is the one name that is continuing to hold up really quite well.

ETFs for Sectors and Industry Groups

In this section, the speaker discusses ETFs for sectors and industry groups.

• Two-month daily price chart View and RSI can help in getting your arms around possible movement among sectors and industry groups.

• IHI medical devices stocks are in a nice uptrend, which makes it defensive but also has growth components.

• Gold stocks were flat for the week but they're holding in here with positive momentum.

Technology Sector

In this section, the speaker discusses technology sector.

• Within technology, areas are heavily impacted naturally by earnings.

• The view of software shows it pulled back this week.

• Overall group is coming under a little bit of distribution.

• Semiconductors have been in quite a downtrending phase but trying to turn around.

Small Cap Stocks

In this section, the speaker discusses small cap stocks.

• The Russell 2000 small-cap index is not healthy and we are not in an uptrend.

• Taylor Morrison Home and Beezer Homes are two small-cap home builders that have had a base breakout with big volume.

• Small-cap stocks can have true outperformance but they do go the knife falls both ways on the downside as well.

Small Cap Stocks and Earnings Reports

The speaker discusses small cap stocks that are performing well in the building and construction industry, as well as upcoming earnings reports for various companies.

Small Cap Building Stocks

• Simpson Manufacturing is a small cap stock that does well in the building and construction industry.

• F.I.X. is another small cap stock with strong earnings related to building.

• EMECOR is entering into a nice base breakout with heavy volume, making it an interesting stock to watch.

Upcoming Earnings Reports

• Shopify's earnings report will be closely watched as a proxy for potential retail trends.

• Ferrari has been on the run and is due to report earnings soon.

• Apple's earnings report will be closely watched as one of the last Mega Cap Fang stocks to report.

• Microchip Technology's deteriorated price action makes its upcoming earnings report noteworthy.

• Advanced Micro's RSI poised to get into positive territory makes it an interesting semiconductor stock to watch.

• Berkshire Hathaway has been acting well and trending higher going into its earnings report, making it another closely watched name.

• Gold stocks have been disrupted by weather-related issues, but they will still be closely watched during their upcoming earnings reports.

Overall, there are several small cap stocks worth watching in the building industry, while many companies' upcoming earnings reports will be closely watched for potential trends and insights.