Rally Mode: Bitcoin Hits New ATH, Fed Rate Cut Looms, and Stocks Charge Ahead

As we approach the final trading weeks of 2024, several key events and data releases are poised to influence market movements. Here’s what to watch:

Market Sentiment

Sentiment Index Score: 22 (Optimistic)

The overall sentiment captured by Fraywire.com reflects a predominantly bullish outlook:

• Bearish Contributions: 31%
• Pessimistic Contributions: 9%
• Optimistic Contributions: 7%
• Bullish Contributions: 54%

This sentiment aligns with key drivers such as:

• Expectations of a Federal Reserve rate cut this week.
• Positive momentum from last week’s earnings reports (Adobe, Oracle) and anticipation of strong results from Nike and FedEx.
• Bitcoin’s historic surge above $100,000, boosting confidence in risk assets.

Observation:

• News sources like CNBC, Market Watch, and Valuetainment show a high degree of bullish sentiment.
• However, outlets such as New York Times and Defense News have more bearish/pessimistic contributions, reflecting lingering concerns over macroeconomic risks and geopolitics.
• The split in sentiment suggests cautious optimism – while momentum remains positive, investors should watch for any macroeconomic surprises.

Key Earnings Reports This Week

• Monday, December 16:
  • Daily Journal Corporation (DJCO): Investors will look for insights into the company’s publishing and software businesses.
• Wednesday, December 18:
  • Micron Technology (MU): Analysts anticipate updates on memory chip demand and pricing trends.
  • Lennar Corporation (LEN): The homebuilder’s results may shed light on housing market conditions.
• Thursday, December 19:
  • Nike Inc. (NKE): Market participants will focus on global sales performance and inventory levels.
  • FedEx Corporation (FDX): Earnings will provide indications of global trade activity and shipping demand.

Earnings from Last Week

• Oracle Corporation (ORCL): Reported strong cloud services growth, beating earnings expectations and boosting investor confidence in its transition to cloud computing.
• Adobe Inc. (ADBE): Delivered solid quarterly results, with significant revenue from its digital media segment, reflecting robust demand for creative software.

Upcoming Economic Data Releases and Potential Market Impacts

• Monday, December 16:
  • Empire State Manufacturing Survey: Offers insights into manufacturing activity in New York State.
• Tuesday, December 17:
  • Retail Sales (November): Expected to rise by 0.5%, indicating consumer spending trends.
  • Industrial Production: Provides data on overall industrial output.
• Wednesday, December 18:
  • Federal Reserve Interest Rate Decision: The Fed is anticipated to cut rates by 0.25%, bringing the federal funds rate to 4.50%-4.75%. Investors will closely monitor the accompanying statement for future policy direction.
• Thursday, December 19:
  • Existing Home Sales: Projected to increase, reflecting housing market health.
• Friday, December 20:
  • Personal Consumption Expenditures (PCE) Price Index: The core PCE is expected to rise by 2.9% year-over-year, serving as a key inflation gauge for the Fed.

Technical Analysis

S&P 500 (SPY)

• Support Levels: The S&P 500 finds strong support around $600 with additional key support at $590, a level observed from previous consolidation zones.
• Resistance Levels: Immediate resistance lies at $610. A breakout above this could push the index to test new highs around $620.
• RSI (Relative Strength Index): The current RSI for the S&P 500 is hovering around 65, indicating the market is approaching overbought levels but still shows strength. A move above 70 may signal caution for bulls.
• Sentiment: The broader market sentiment for the S&P 500 remains optimistic, reflecting investor expectations of a Fed rate cut this week and resilience in corporate earnings.

Bitcoin (BTC)

• Support Levels: Bitcoin has immediate support at $95,000, with stronger buying interest observed near $90,000 in case of a pullback.
• Resistance Levels: BTC faces psychological resistance at $105,000. A decisive break above this level could open the door for $110,000 and beyond.
• RSI: Bitcoin’s RSI stands at 72, firmly in overbought territory. This signals the possibility of a short-term correction but aligns with the strong bullish momentum seen recently.
• Sentiment: Crypto market sentiment remains overwhelmingly bullish, fueled by increasing institutional interest and investor FOMO (Fear of Missing Out).

Top News and Topics Influencing Markets This Week

• Federal Reserve Policy Meeting: The anticipated rate cut and future policy guidance will be pivotal for market sentiment. Reuters
• Global Economic Indicators: Data from China, including industrial production and retail sales, will be closely watched for signs of economic stabilization. Reuters
• Geopolitical Developments: Political events in Germany and South Korea may introduce volatility in European and Asian markets. Reuters

Biggest Stock Gainers from Last Week

• Oracle Corporation (ORCL): Shares rose significantly following strong earnings, driven by robust cloud services growth.
• Adobe Inc. (ADBE): Stock appreciated after reporting better-than-expected earnings, highlighting demand for digital media solutions.

In the News This Week

1. “The December Fed Meeting, Nike and FedEx Earnings, and More to Watch This Week”
   • This article outlines key events, including the Federal Reserve’s anticipated rate cut and major earnings reports from companies like Nike and FedEx, which could influence market movements. Barron’s
2. “US data has Fed striding toward rate cut next week, and tip-toeing into 2025”
   • Discusses expectations for the Federal Reserve’s upcoming interest rate decision and the cautious approach policymakers may adopt for future rate cuts in 2025. Reuters
3. “Stock Market Rallies On: AI Software, Biotechs, Costco Coming Up”
   • Highlights the stock market’s recent performance, with a focus on upcoming earnings from AI software companies, biotech firms, and retailers like Costco. Investors.com