Last week President Trump asked “who is our bigger enemy” - Fed Chair Jerome Powell or Chinese President Xi Jinping. The stock market started the week strong but faltered as tensions rose, with the S&P 500 down 42 points on the week to 2847, a decrease of 1.5%.
Trump’s commentary came before Powell’s speech in Jackson Hole, Wyoming, during which he observed that, “Trade policy uncertainty seems to be playing a role in the global slowdown and in weak manufacturing and capital spending in the United States.”
S&P 500 (SPX) Daily Chart
Our approach to technical analysis uses market cycles to project price action. Our analysis this week is for the SPX to continue to roll over for 3-5 days within the context of the current minor cycle shown above. Our near-term target is 2820-2850. We then expect a bounce before the downside action resumes.
Lowe’s Companies (LOW) Stock Weekly Chart
Let’s also take a look at an individual stock that moved significantly. Lowe’s Companies Inc (NYSE:LOW) rose by 13% last week to over $106 after beating on earnings, revenue, and same store sales, while holding firm on its guidance for the fiscal year.
LOW is now early in the rising phase of its current cycle, and as such, we see further upside potential. Before the end of the year, we believe the stock could reach $118.
Thus even given our bearish view on the stock market, we believe that good stocks such as Lowe’s will do better on up days and not fall as much on down days.
For a more detailed analysis of both of these charts, check out the latest episode of the askSlim Market Week show.