A thrilling week in the stock market: Dow Jones passes 40,000 for first time | chart watcher

Did it! The Dow Jones Industrial Average ($INDU) closed above 40,000 for the first time, marking another record close for the index. It’s been a really exciting week!

And most of that excitement came in the final minutes of the trading week. We’ll take it. After several weeks of lethargic activity in the stock market, optimism has returned.

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Chart 1. The Dow Jones Industrial Average closed above 40,000. Investors expect the upward momentum to continue next week.Chart source: StockCharts.com. For educational purposes.

Summary of stock market activity

Stock markets got a boost on Wednesday after inflation data came in cooler than expected. There was then a brief breather on Thursday and most of Friday, but the final minutes of the trading day saw an unusual injection of optimism again in weekend trading. The stock market got what it wanted, reacted and decided to get a head start on the weekend.

Next week, investors will be focused on looking for upside. Now that interest rate hikes are off the table and a cut is expected sometime this year, investors have regained confidence in the stock market.

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The CBOE Volatility Index ($VIX) continues to remain low, further confirming that investors are becoming complacent. $VIX is close to its December 2023 low, which has rekindled investor confidence in stocks since the October 2023 low.

Chart 2. Daily chart of VIX. VIX is near its December lows, which coincides with investor confidence regained after October’s decline in stocks.Chart source: StockCharts.com. For educational purposes.

While stocks were on the rise, commodities were also on the rise. A look at the daily chart of the Invesco DB Commodity Tracking Index Fund (DBC) shows that the index has broken out of a downtrend channel, suggesting that the downtrend in commodity prices may be behind us.

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Commodities are sensitive to inflation, and given that inflation may cool, commodities could break out of the flag pattern shown in the chart below.

Chart 3. Rising raw material prices. Commodities are also showing strength as they break out of the flag pattern.Chart source: StockCharts.com. For educational purposes.

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Copper and silver prices surged on Friday and gold looks set to bounce back to record highs.. Silver had a significant breakout on Friday. To get an idea of ​​the size of the breakout, it would be a good idea to take a look at the iShares Silver Trust ETF (SLV) chart.

Chart 4. Silver sees a significant uptrend. The iShares Silver Trust ETF (SLV) has surpassed its 2021 high. How much higher can it go? The next resistance is around $35.Chart source: StockCharts.com. For educational purposes.

SLV has surpassed its February 2021 high. Friday’s price action suggests prices will continue to rise next week. The next resistance level could be the 2012 high, around $35, so there is upside for SLV. If you are interested in participating in the silver rally, you might want to consider opening a position in SLV. However, check your stop loss before you start trading. It looks like SLV will move higher, but anything could reverse the move. Get familiar with the risk/reward ratio.

SLV is well above its 20-week exponential moving average. and percentage price oscillator (PPO) shows that momentum is rising. If the trend continues, SLV could see a strong rally. It’s been quite a while since Silver received some love.

And then there is NVIDIA

I think next week will be interesting. The highlight is NVIDIA’s earnings. The company reports on Wednesday after the deadline. Analysts expect revenue of $5.57 trillion and sales of $24.57 billion. A win for NVIDIA (NVDA) could be a big catalyst for the market to move higher. However, I would be concerned if NVDA fails to meet expectations. Downward movements are of much greater magnitude than upward movements. NVDA has had a huge impact on stock market performance, so almost all investors will be tuning in for news after the close on Wednesday.

weekend wrap up

• The S&P 500 rose 0.12% to 5,303.27, while the Dow Jones Industrial Average rose 0.34% to 40,003.59. The Nasdaq Composite Index closed at 16,685.97, down 0.07%.
• $VIX was down 3.46% at 11.99.
• Top performing sector this week: Technology
• Worst performing sector this week: Industrials
• Top 5 Large Cap SCTR Stocks: MicroStrategy Inc. (MSTR); Vistra Energy Corporation (VST); Super Microcomputer (SMCI); Robinhood Markets (HOOD); Vertiv Holdings (VRT)

On the radar next week

• NVIDIA (NVDA) Revenue
• Federal Reserve Speech
• April existing home sales
• new home sales
• Michigan Consumer Sentiment in May

disclaimer: This blog is for educational purposes only and should not be construed as financial advice. You should not use any of our ideas and strategies without first evaluating your personal and financial situation or consulting a financial professional.