The market’s direction remains shrouded in uncertainty, with major indices stuck in a narrow trading range. Over the past five days, the S&P 500 has oscillated within a mere 13.6-point band, equivalent to a minuscule 0.2% fluctuation. The Nasdaq and Nasdaq 100 have fared similarly, with ranges of 14.76 points and 0.83 points, respectively, translating to movements of 0.08% and 0.2%.
As a result, both the Nasdaq and Nasdaq 100 have repeatedly tested their 21-day exponential moving average, leaving them precariously close to breaching this key technical level. Meanwhile, the S&P 500 has ventured near its average on multiple intraday occasions.
The upcoming week marks the commencement of the third-quarter earnings season, with a slew of prominent companies set to report, including PEP, INFY, DAL, JPM, WFC, PGR, BLK, and BK. The financial heavyweights will take center stage towards the end of the week and into next week, paving the way for a deluge of earnings reports over the next three weeks.
It’s worth noting that companies typically enter a blackout period preceding and following their earnings releases, during which they are prohibited from repurchasing their own shares. This absence of demand can lead to market weakness, particularly during the periods of April/early May, July/early August, October/early November, and January/early February. In the first quarter of 2024, S&P 500 share buybacks reached $237 billion, while the 12-month total ending March 2024 stood at $817 billion.
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