S&P 500 Breaks Records as Macro Signals Diverge
Macroeconomic data drove the $S&P 500(.SPX)$ to a brand-new historical high this week, though macro exhaustion caused a slight market decline by Friday:
Inflation Data Sparks a Rally Earlier in the week, the July Consumer Price Index (CPI) and Producer Price Index (PPI) figures boosted equity markets. The wholesale inflation reading (PPI) remained unchanged month-over-month, boosting optimism that the Federal Reserve will pause interest rate adjustments at its September policy meeting. This data originally catalyzed a rally on Thursday, pushing the S&P 500 to a record close near 7,800.
Late-Week Pullback: A Slowing US Consumer The initial rate-pause optimism was tempered on Friday by economic data indicating that the primary engine of the US economy is cooling. July retail sales unexpectedly fell 0.6%, missing expectations of a slight increase. Concurrently, the University of Michigan consumer sentiment index registered a disappointing decline, signaling that macroeconomic pressures are causing consumers to dial back spending.
In summary, the expectations as of today are:
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Probability of a Hike: ~31%–34% chance of a 25-basis-point increase.
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Probability of a Hold: ~65%–69% chance rates remain unchanged.
Corporate Highlights & Semiconductor Volatility Reddit (RDDT) surged 12% today on news that the platform will officially be added to the S&P 500 index prior to the opening bell on August 18.
Meanwhile, semiconductor firms experienced broad fluctuations:
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$SanDisk Corp.(SNDK)$ : Soared over 35% this week following strong revenue guidance.
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$Applied Materials(AMAT)$ : Dropped -5% today despite beating earnings.
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$Micron Technology(MU)$ : Gained 10.7% this week suggesting the bottom is in.
(Note: MU and AMAT are tracked daily using levels in the Founding Members Exchange Hub).
High-Probability Trades This Week These setups shared last weekend performed exceptionally well:
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$SpaceX(SPCX)$ : Reached our extended target of 142.8 for a 7.3% gain 🎯.
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$Netflix(NFLX)$ : Reached its extended level of 78.7 for a 6% gain 🎯.
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$Wal-Mart(WMT)$ : Gained 3% this week, crossing our 114.8 target 🎯.
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$Tesla Motors(TSLA)$ : Reached our extended target of 347 for a 5.8% gain 🎯.
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$Amazon.com(AMZN)$ : Fell as anticipated. Its 4.3% weekly loss crossed the 267 first target 🎯 and is getting closer to 261.
Modeled last Friday, these levels have proven essential for setting targets AND managing risk.
This week, expectations for bullish continuation in $Apple(AAPL)$ and $iShares Bitcoin Trust(IBIT)$ were invalidated when they lost their central weekly levels at 310 (-1%) and 36.4 (-1.1%), respectively.
Using these levels correctly offers a significant improvement in risk to reward ratios: average gains sit at 4%, while average invalidation is just 1%.
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