Good morning traders!
Hope you all had a great weekend and are ready for another volatile week. Plenty of catalysts to cover so let’s cut to the chase!
Economic Data
Lending has seen a massive spike in tightening which is more focused on large purchases from commercial to industrial loans. This will bring a slowdown in expansion to businesses and orders from consumers. I only think this is going up from here until we see credit users et squeezed on their debt. Once they tap out on swiping away, we will see this start to decline. The real question to ask is how long is the FED going to strangle rates at highs? Do they want consumers to tap out at once or bleed away into debt. Seems like they want max pain on consumers with a lengthy hiking cycle.
Top 5 companies are important to keep on watch as they contain now 21% of the S&P500 market capitalization which was noted. As we expected to see economic slowdown in 2023 many investors turned to big tech to place their capital. Just as we have seen from many of the stocks that have already reported earnings, many beats across the board which was quite the shock. Although spending has remained robust showing consumers are still able to stay afloat on credit. Let’s take a look at those top 5 companies and what % weight each carry.
Apple: 7.19%
Microsoft: 6.24%
Amazon: 2.7%
Nvidia: 1.97%
Google: 1.82%
Visualizing the difference in weight % between the Top 5.
Investors have moved into Apple and Microsoft which can also be reflected in their stock prices. This week Apple is due to report Q1 earnings which will bring major volatility to the index. Microsoft fueled a move higher after the failed attempt lower below VAL 4095. We will see direction moving forward whether up or down it will be determined on how Apple reports along with economic data to compliment the move. Market loves this 4095-4192 and I expect it to remain that way unless current economic conditions change.
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