Market Uncertainty: Tech Troubles and Economic Doubts | July 30, 2024

The S&P 500 faced resistance at 5,500 and couldn’t break through, dropping back to last week’s lows. The ascending triangle broke down, signaling a bearish trend. Even with a strong report, Microsoft didn’t beat expectations, causing a sell-off. Tech stocks are too expensive, while cyclical and small-cap stocks have valuation issues.

Nvidia’s chart showed a big drop and a clear downtrend with lower lows and highs. It might bounce once it hits oversold levels, but the recent steep decline is significant. Microsoft’s high valuation and inability to exceed expectations add pressure on tech stocks.

The market depends on economic improvement or more aggressive rate cuts, but current data doesn’t support this. The dollar firmed up due to concerns about inflation control, while yields lag because the economic data isn’t strong enough. This uncertainty causes issues in market rotations.

In summary, the stock market faces pressure from unresolved tech valuations and the need for economic validation in cyclical stocks. Investors should stay cautious, focus on solid fundamentals, and watch economic indicators, especially employment reports, to gauge market direction. The current situation signals the need for careful and strategic positioning amidst market volatility.