Navigating Financial Markets Post-Election: A Comprehensive Analysis
The week following the election saw the Family in high spirits, but this past week has left them feeling disappointed. While disappointment isn’t as severe as dismay, the gains made post-election have vanished. The Federal Reserve played a role in this shift, with a bit hotter-than-expected inflation numbers and Powell’s reluctance to lower rates causing concern. The Family prefers lower rates for stability and certainty.
Adding to the uncertainty are the changes expected with the new administration. Big Brother Biotechnology took a hit with the announcement of RFK Jr. heading Health and Human Resources. Despite this, all sectors, including Granddad, felt the impact to some extent.
Market Analysis
Granny Retail: The consumer’s behavior remains a key indicator. XRT failed to rally above $80 but held above $78, potentially reversing this week.
Granddad Russell 2000 (IWM): Failed to reach a new all-time high, prompting speculation of a double top. A drop below 200 is a significant milestone.
Biotechnology: Avoided a breakout to the upside, resulting in a significant drop this week. The support level at 132 has been revisited sooner than expected.
Sister Semiconductors: Underperformed since July, with NVIDIA’s upcoming report potentially influencing the sector’s performance. A move over 260 would be positive.
Transportation: Had an inside week after hitting all-time highs, signaling continued optimism for the US economy. IYT’s performance will be crucial.
Prodigal Son Regional: Maintained breakout levels at $65, a positive indicator for the upcoming week.
Market Outlook
- Crypto: A standout performer, poised to reach 100k with the support of a pro-crypto administration.
- Retail Sector: Crucial to monitor, with implications for the broader economy.
- Tech Sector: NVIDIA’s report will be a key event to watch for market trends.
ETF Summary
- S&P 500 (SPY): 575 support, 600 resistance.
- Russell 2000 (IWM): 227 support, 244 resistance.
- Dow (DIA): 430 support.
- Nasdaq (QQQ): 500 pivot level.
- Regional Banks (KRE): 65 pivotal.
- Semiconductors (SMH): 235 support, 250 resistance.
- Transportation (IYT): Stability above 71.
- Biotechnology (IBB): 132 support, 138 resistance.
- Retail (XRT): Key support at 78.50.
- High Yield Corporate Bonds (HYG): 79.50 pivot level.
In conclusion, while disappointment currently lingers, market sentiment can shift quickly. Understanding these market dynamics and key levels can help investors navigate the uncertainties and make informed decisions for their financial future.