The stock market ended the week on an optimistic note with some surprising news | chart watcher

This has been a roller coaster week for the stock market, and it’s a reminder to be careful when markets are trading at record highs. Negative news can trigger emotions, causing a domino effect reaction.

The stock market was pretty lethargic earlier this week as investors waited for Nvidia’s earnings. Shares soared in after-hours trading after NVDA earnings were released after the market closed on Wednesday. The gains continued as markets opened on Thursday, with stocks hitting record highs on Friday.

But despite NVDA’s rally, the rest of the market was surprised. There was a significant sell-off on Thursday, sending many investors out. Broad stock indices also fell, as did precious metals.

The May PMI (Purchasers’ Manufacturing Index) came in higher than expected. This may have reminded investors that a booming economy could mean higher interest rates in the long term. Minutes from this week’s FOMC meeting suggest that Fed members are unconvinced that inflation has fallen sufficiently to warrant a rate cut anytime soon.

On Friday, the S&P 500 ($SPX) and Nasdaq Composite ($COMPQ) recovered some of Thursday’s losses. This was amazing. You would think the sell-off would continue before Memorial Day weekend.

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Another interesting aspect is the price movement of US Treasury yields. You will experience a pattern of integration. Until they break out of this pattern, we won’t know which direction returns will go. The Fed has promised to get inflation to 2%, but it’s unclear how long it will take to get there.

Chart 1. 10-year U.S. Treasury yield on a consolidated basis. Returns can occur in either direction. A lot will depend on future economic data points. Chart source: StockCharts.com. For educational purposes.

The comforting thought is that the CBOE Volatility Index ($VIX) is low so investors are not scared. This supports the bull market theory. It’s difficult to predict which direction the stock market will move, especially after the FOMC meeting minutes, which could see it continue to move sideways for some time.

Investor enthusiasm is palpable as stocks continue to hit record highs. Over 100 Stocks Hit All-Time Highs (Check out StockCharts Predefined Scans of New All-Time Highs)). The New Highs-New Lows Index ($NYHL) also shows more new highs than lows, but the number of new highs is not as high as it has been in recent weeks (see chart below).

Chart 2. New high – new high. The number of new highs is greater than the number of new lows. Chart source: StockCharts.com. For educational purposes.

A few stocks to watch

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Take a look at First Solar (FSLR)’s performance this week. The stock price soared, surpassing the high of about $230 about a year ago. Despite the rise in FSLR, its relative strength compared to the S&P 500 index is -32.81%. There’s a lot of catching up to do.

Chart 3. FSLR jumps with AI. AI infrastructure must rely on energy companies and enterprises.

Why are stocks attractive? FSLR is attracting attention from analysts as a company that will benefit from the AI ​​revolution. There’s a lot of talk about how energy is needed to increase capacity in data centers, and FSLR could be one of the companies that could benefit from increased demand.

FSLR reached three of StockCharts’ predefined scans: a new 52-week high, a move above the cap channel, and a P&F double high breakout.

Another stock that hit new highs was Dell Technologies (DELL), again due to its contributions to the AI ​​field. On DELL’s daily chart (see below), the stock is in an upward trend, with the Relative Strength Index (RSI) just above the 70 level.

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The stock also made the top five SCTR stocks (see weekend recap below). Will that power continue? We’ll find out when the company reports earnings next week.

Chart 4. DELL hits a new high. The stock is showing strength and is trading well above its 50-day simple moving average. Will earnings push this stock higher? Chart source: StockCharts.com. For educational purposes.

Closing Thoughts

With NVDA earnings in the rearview mirror, could FSLR or DELL be the next companies that stock investors will pay attention to? You can’t rule it out. This market will surprise you, so be prepared for anything. Despite the market’s ups and downs this week, the overall mood is optimistic, which looks to be a good start to the holiday weekend.

weekend wrap up

• The S&P 500 closed at 5,304.72 and the Dow Jones Industrial Average rose 0.01% to 39,069.59. The Nasdaq Composite Index rose 1.1% to 16,920.79.
• $VIX fell 6.66% at 11.92.
• Top performing sector this week: Technology
• Worst performing sector this week: Energy
• Top 5 Large Cap SCTR Stocks: MicroStrategy Inc. (MSTR); Vistra Energy Corporation (VST); Super Microcomputer (SMCI); Vertiv Holdings (VRT); Dell Technologies (DELL)

On the radar next week

• Revenues from Salesforce (CRM), Abercrombie and Fitch (ANF), and Dell Technologies (DELL).
• March housing prices
• consumer confidence
• April PCE
• Federal Reserve Speech

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 with a financial professional.