The stock market rally continued to show strength into Friday, moving decisively higher on the week.

Big tech and many other sectors shrugged off a post-Fed pullback and more earlier in the week; bad earnings and poor guidance from Wal-Mart, Meta, and Qualcomm, to mention a few. With Amazon, Apple, Microsoft all doing “better than feared”, even the “R” word could not stop the train in the indices, junk bonds and most sectors.

Apple, considered a bellwether, saw shares gain thanks to strong iPhone sales, mainly in India. Consequently, technology investors should continue to monitor Apple for further signs of strength or weakness in technology and consumer demand. Amazon’s stock also rose. The e-commerce giant exceeded sales projections as sales increased 7%. Both stocks (AMZN and APPL) eased concerns about the technology sector.

Furthermore, First Solar (FSLR) shares gained another 12%, on top of the 15% Thursday, on both an outperformance of the EPS and sales and the potential progress made by Congress on legislation that includes solar and green-energy subsidies. The bill has a long way to go, however, to become reality.  

With all this good news, what might we expect from here?

Not everything is coming up roses in the consumer sector, as reflected by Granny Retail (XRT). Some companies did way worse than expected. Intel (INTC), META and Roku (ROKU) were noteworthy, with deep declines. All dropped in price precipitously due to low demand, poor advertising sales and falling revenues. And Granny Retail is doing okay, but not really buying the euphoria — at least, not yet.

Looking back at the chart of AAPL, we an see that 170-175 is huge resistance. And now that the price cleared 158, that level has to hold up.

In XRT, given the rise of both AAPL and AMZN, the price action is more meh than “heck yeah!” The XRT price has cleared back over the 50-DMA. The momentum shown by our real motion indicator has improved to a degree, but XRT still underperforms the benchmark.

On Friday, consumer sentiment showed some improvement. Nonetheless, we need to see more from our consumers. As we head into this coming week, we must continue to watch three key indicators:

XRT: Recession, stagflation, whatever you wish to call the current economic status — consumers must remain cheerful in the face of a 40-year high in the PCE. Inflation has taken a breather, but has not necessarily peaked. How many rallies in growth stocks have quickly petered out when investors realize that the “inside” sectors of the market are more pessimistic?TLT (long bonds): a gauge for how the market perceives the Fed — not hawkish-looking enough here, as yields have fallen. If the Fed does not get more aggressive, the market rally can continue, BUT inflation will go nuts. The housing market is now softer; any drop in yields that sustains will bring back homebuyers. With home prices still very high, new buyers can push related commodity prices like wood, steel and copper to a new leg up. On the flipside, if Powell and crew get more aggressive, the big tech rally will reverse very quickly.Oil: Spot Brent reached nearly $112 a barrel with very little fanfare. Should oil rally more from here, that will not only light a fire under the rest of the commodities, but could also negatively impact the consumers and the big tech companies as their costs will continue to rise. Not to mention, the Fed is watching as part of their data points.

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Mish in the Media

Mish discusses potential upside for stocks, gold and high yield bonds in her Thursday guest appearance on StockCharts TV’s The Final Bar with David Keller.

Mish talks big tech earnings and how long we can expect growth to outperform on Cheddar TV.

In this video, Mish, along with the Bitwise CEO, discusses whether Fed can control inflation, the future of the rates, bitcoin, equities and commodities.

Read this week’s article from Mish for CMC Markets, titled “A Trendsetting Week in the Markets (Part 1 of 2)“.

In this interview by Dale Pinkert during the F.A.C.E. seminar, Mish examines different sectors using the 50- and 200-week moving averages.

Mish presents “Working as a Trader” on Business First AM.

Also from Business First AM, Mish explains what to look for before putting cash back into the market.

ETF Summary

S&P 500 (SPY): 403 now closest support with 417 resistanceRussell 2000 (IWM): 182.50-183.50 support-maybe move to 190 nextDow (DIA): 322-323 support now, 331 next resistanceNasdaq (QQQ) A weekly close over 308.55 should keep the party going, with resistance 317KRE (Regional Banks): 60 key support, 65 resistanceSMH (Semiconductors): 230 now pivotal support, 237.50 some resistanceIYT (Transportation): The demand side transportation sector cleared the base and now must hold 229.50IBB (Biotechnology): 125 key to close aboveXRT (Retail): 62 now support to hold, with 66.25 big resistance

Mish Schneider

MarketGauge.com

Director of Trading Research and Education