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Top Charts of the Week: Market Dynamics Shift on Inflation Data

AInvestThursday, Jul 11, 2024 11:57 am ET
2min read

In a week marked by significant market movements, we've seen intriguing developments across various sectors and indices. Here's our analysis of the top charts that caught our attention:

  • 1. iShares Russell 2000 ETF (IWM): Small-Caps Surge

  • The IWM ($IWM(IWM)) chart has become a focal point for investors this week, showcasing the renewed interest in small-cap stocks. Trading at $210.11 with a notable 3.31% daily gain, IWM is demonstrating robust momentum. The ETF's price action, positioning above key moving averages (24, 50, and 200-day SMAs), suggests a bullish trend.

    What's particularly striking is the formation of an ascending channel pattern since October, indicating a series of higher lows and higher highs. This technical setup, combined with increased trading volume, points to strong buyer interest. However, as IWM approaches resistance levels around $210-$215, traders should remain vigilant for potential consolidation.

    The outperformance of small-caps, as represented by IWM's 3.3% gain, stands in stark contrast to the broader market's mixed performance. This divergence reflects shifting investor sentiment following the latest CPI data, which has amplified expectations of a Federal Reserve rate cut in September.

  • 2. Coinbase Global Inc. (COIN): Crypto Exchange in Focus

  • Coinbase's ($COIN(COIN)) chart presents an intriguing narrative of consolidation within a longer-term uptrend. While the stock remains above its rising 200-day moving average, the ADX below 20 suggests recent sideways movement. This consolidation phase could be crucial for COIN's next directional move.

    The increased trading volume and improving momentum, as indicated by the rising 14-period Slow Stochastic Oscillator, hint at building investor interest. However, the bearish On Balance Volume (OBV) indicator suggests some caution is warranted. As the crypto market continues to evolve, COIN's price action will be an essential barometer for the sector's health.

  • 3. Costco Wholesale Corporation (COST): Retail Giant's Correction

  • Costco's ($COST(COST)) chart reveals a correction within its long-term bullish trend. Despite trading 22.4% above its upward-sloping 200-day moving average, COST is showing signs of near-term weakness. The MACD below the signal line and falling 14-period Slow Stochastic Oscillator indicate bearish momentum.

    Interestingly, COST continues to outperform the S&P 500 in relative strength analysis, highlighting its resilience. The increased trading volume and shift in On Balance Volume suggest a potential shakeout of weaker hands. As a bellwether for consumer spending, COST's price action in the coming weeks will be crucial to watch, especially in light of the recent inflation data.

    In conclusion, this week's charts reflect a market at a crossroads. The outperformance of small-caps, consolidation in the crypto space, and correction in a retail giant underscore the complex interplay of factors influencing investor decisions. As we navigate through changing economic indicators and monetary policy expectations, these charts will continue to provide valuable insights into market sentiment and potential future trends.

Disclaimer: the above is a summary showing certain market information. AInvest is not responsible for any data errors, omissions or other information that may be displayed incorrectly as the data is derived from a third party source. Communications displaying market prices, data and other information available in this post are meant for informational purposes only and are not intended as an offer or solicitation for the purchase or sale of any security. Please do your own research when investing. All investments involve risk and the past performance of a security, or financial product does not guarantee future results or returns. Keep in mind that while diversification may help spread risk, it does not assure a profit, or protect against loss in a down market.