Weekly Market Outlook (2/6/23)

WEEKLY MARKET OUTLOOK

FOR THE WEEK OF FEB. 6, 2023

Bull Case: Bulls are currently sitting within a supply zone, which will soon deteriorate if price cannot break above 4218. The ideal scenario for bulls would be defending 4100-4113 area, which was previously acting as resistance. If bulls defend this area and break above 4218, the next strong supply zone sits at 4279.

Bear Case: Bears want to bring the price below the 4100 level. A breakdown of this level could result in a visit to the next possible major support level, sitting near the trend line and daily demand at 3945.25.

SUPPORT AND RESISTANCE

Apple Inc. (AAPL) 30m

Tesla Motor Co. (TSLA) 30m

Invesco Trust (QQQ) 30m

Alphabet Inc. (GOOG) 30m

Amazon.com Inc. (AMZN) 30m

EARNINGS RELEASE CALENDAR

FOR WEEK OF FEB 6

NEWS RECAP

Jan 30 - Feb 5

Fed Rates On The Rise Again, But No Cuts In Sight

On Wednesday, Fed policy makers raised their target range on rates by just a quarter point, a step down from the half-point increase they implemented in December. Despite this, they maintained that more rate increases are still in the works and that once they stop raising rates, there won’t be any rate cuts in the immediate future. The consensus is that inflation is still too high and in order to bring it back to the 2% target, higher interest rates and a weaker labor market are necessary. Investors are betting that the Fed will cut rates deeply next year, while the projections policy makers put forth in December showed their rate-range ending 2024 just a half point below the current level.

Big Tech Reports Are In

Apple, Amazon.com, and Google parent Alphabet Inc. all reported their December quarter results on Thursday, revealing the slowdown of the global economy as the combined revenue only grew by 7% in comparison to 28% in 2021 and 21% in the prior year. Despite the weak results, investors appear to remain optimistic that the slowdown will be short-lived. On the respective calls, all three companies voiced optimism for 2023, but none offered a forecast for the year ahead.

U.S. Job Market Defies Expectations

Despite predictions from economists that the labor market would start to cool off any second, the U.S. job market has remained surprisingly resilient during the economic downturn caused by the COVID-19 pandemic. Unemployment has dropped to its lowest level since 1969 and job openings have increased across a variety of sectors, such as manufacturing and restaurants. Furthermore, wage growth is on the rise, with employers offering signing bonuses and other incentives to attract new employees. This is not the news that economists and the Fed had originally expected. In order for the Fed to become confident that their 2% inflation target is on the horizon, a weaker labor market is necessary.

German Bank Aids In Crypto Adoption Trend

DekaBank, the German banking giant, is looking to provide its more than 1.5 million customers with cryptocurrency services as we witness the integration of digital assets into the world of corporate finance. The recent surge in popularity of cryptocurrencies is due to an increased demand from customers and the consequent rise in adoption. As cryptocurrencies continue to rise in value and investor confidence is being restored, more traditional banks are likely to follow suit, adopting crypto-related services.

Mortgage Rates Continue To Decline

The average rate on the 30-year fixed rate mortgage has fallen to 6.09% from 6.13% one week ago, the lowest mortgage rates have been in nearly 5 months. With the economy likely heading into a recession, it’s possible we’ve already seen the peak of this rate cycle. It is also important to note that interest rates are notoriously volatile and could tick back up on any given week.