/ August 04 / Weekly Preview
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Monday:
N/A
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Tuesday:
ISM Services PMI (51.5 exp.)
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Wednesday:
N/A
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Thursday:
Initial Jobless Claims (220K exp.)
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Friday:
N/A -
Monday:
Palantir Technologies Inc.
MercadoLibre, Inc.
Vertex Pharmaceuticals Incorporated
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Tuesday:Advanced Micro Devices, Inc.
Caterpillar, Inc.
Amgen Inc.
Arista Networks, Inc.
Eaton Corporation, PLC
Pfizer, Inc.
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Wednesday:
McDonald's Corporation
Novo Nordisk A/S
Walt Disney Company (The)
Uber Technologies, Inc.
Shopify Inc.
Applovin Corporation
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Thursday:
Eli Lilly and Company
Toyota Motor Corp Ltd Ord
Gilead Sciences, Inc.
ConocoPhillips
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Friday:
N/A
Seasonality Takes Its Toll
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Last week, markets traded in a mixed fashion with macro headwinds mixing with high-stakes earnings announcements. It was a bearish week for the S&P 500, which declined -2.4%, with the Nasdaq not far behind, at -2.17% after a volatile week of trading in Tech. Most of the decline occurred on Friday following a much weaker-than-expected jobs report and a resurgence in tariff announcements.
Yet all of the price action falls into an entirely expected pattern, seasonally speaking. Using our latest Market Study instrument (live on the platform and soon to be announced via video and a separate newsletter), we have compiled a chart of the last 10 years of trading in SPY between June 01 and September 30.
Besides 2017, when the benchmark ETF fell -21.5% in this period, all of the other years saw either moderate declines of up to -4.4%, or upside up to +11.7%. Yet 2025 (orange line) was tracking at the upper end of this seasonal study and recording one of the best starts to the second half… ever! Gains at the end of July stood at +7.6%, significantly above the historical median (+2.66%). From this perspective, it was only a matter of time before a correction cooled down the equity markets.
SPY Performance June 01 - September 30 vs last 10 years - via Market Study instrument, now live
Looking back to 2014, whenever the first half of the year generated a positive close in SPY (green Signal Lines, also the case in 2025), the average 3-Month forward return was +3.79% with an 80% positive ratio - that would align with the June to September quarter. Again, this average is much lower than the peak of +7.6% return at the July high.
Signal Analysis Market Study
Some data highlights from last week include:
The Fed Meeting: interest rates were held steady, but there was more dissent than usual among FOMC voters. 2 Fed governors voted for a 25bps rate hike due to sticky inflation concerns. On the other hand, Governors Christopher Waller and Michelle Bowman wanted a quarter percentage point reduction, noting that tariffs would cause only a temporary jump in inflation. Chair Powell acknowledged that inflation is trending lower, but stopped short of “declaring victory” on the phenomenon.
While markets interpreted the overall tone as leaning “dovish”, there was a pullback in odds of a September rate cut (from 65% to 39%) - a rather hawkish development. Furthermore, long term bonds (TLT, +1.04%) and gold (GLD, +2.03%) rallied on Friday as SPY declined, a clear risk-off move.
The technical picture remains broadly bullish, despite the pullback. On a short term basis, we could see a decent bounce from oversold conditions, but the selling pressure could very well continue into mid-late August. We should see support hold at the 50-DMA, -1.75% below the last close.
Some of the largest and most influential companies in the S&P 500 have reported earnings last week:
Apple (AAPL) reported revenue of $94.0 billion, its first year-over-year growth in five years, beating estimates of $89.2 billion. EPS came in at $1.57, above the $1.40 forecast. The rebound was led by iPhone and Services sales. CapEx totaled around $9 billion, with increased investment in AI infrastructure. The company also announced a $100 billion share repurchase program. Looking ahead, Apple guided for low-to-mid single-digit revenue growth and gross margins in the 45.5–46.5% range.
Microsoft (MSFT) posted a strong quarter with Intelligent Cloud revenue of $28.9 billion, up 21% year-over-year and above expectations. EPS is projected to grow 14% YoY, supported by accelerating Azure growth. CapEx rose 27% to $24.2 billion, much of it allocated to AI and data centers, and the company authorized a $30 billion stock buyback. Microsoft guided for Azure growth of 34–35% on a constant currency basis, with solid forward momentum in enterprise demand.
Meta Platforms (META) reported revenue of $47.52 billion, up 22% YoY, beating the ~$44.8 billion consensus. EPS surged to $7.14, far above the $5.89 estimate, driven by strong ad sales and improving margins. CapEx hit $17 billion for the quarter and could reach up to $72 billion for the year as Meta ramps AI and data infrastructure. The company also repurchased $9.76 billion in stock. For Q3, Meta guided revenue between $47.5–50.5 billion, with continued margin discipline.
Amazon (AMZN) delivered $167.7 billion in revenue, up 13% and ahead of estimates. At the same time, EPS rose to $1.68, beating the $1.33 forecast. AWS growth reaccelerated to 17%. Still, concerns emerged after Amazon issued weak forward guidance for Q3 operating income ($15.5–20.5 billion), citing pressure on retail margins. CapEx totaled $31.4 billion for the quarter, with full-year spending projected at up to $106 billion, primarily targeting AI and data center expansion. The stock fell ~8% pre-market on the disappointing outlook.
META (green) and MSFT (grey) lead the recovery from the April lows, while AMZN (orange) and AAPL (teal) struggle in 2025;
The second‑quarter GDP report showed a 3% annualized increase, an apparent rebound primarily driven by a sharp decline in imports. This inflated growth on paper even as the underlying domestic demand remained weak. Core GDP, which strips out volatile components like trade and inventories, expanded at just 1.2%, the slowest pace since 2022. Business investment plunged nearly 16%, its deepest drop since COVID, while consumer spending rose modestly at 1.4%. Meanwhile, headline inflation did tick higher with the Fed’s favorite gauge, the trimmed-mean PCE price index, rising to 2.68% from 2.57%. However, that increase will unlikely change the Fed’s current outlook on future rate cuts. The bottom line is that the Q1 and Q2 GDP reports should be dismissed mainly due to the significant anomalies caused by the front-running of tariffs.
Bottom Line: Q3 should give us a better idea of where the economy is settling.
On the tariff front, President Trump announced a surprise tariff escalation Thursday night. The move ratchets reciprocal tariffs highers on dozens of trading partners, significantly increasing duty rates across key economies including, Canada, the EU, India, Taiwan, etc. This unexpected policy shift triggered a sharp equity selloff in Asian markets, semiconductors and export-heavy sectors were particularly hit, and added fresh geopolitical uncertainty just ahead of U.S. markets opening, reviving concerns about spikes in inflation and disruptions to global trade flows.
The U.S. economy added just 73,000 jobs in July, far below the ~110,000 forecast, as the unemployment rate rose to 4.2%. May and June payrolls were revised lower by 258,000 jobs, exposing a deeper slowdown. Despite weak hiring, wage growth remained solid, boosting speculation that the Fed may cut rates in September.
Viewed in a percentage change terms, Initial Jobless Claims + Continuing Jobless Claims rose +8.2% in the last 2 years, while the Unemployment Rate rose +20%.
Various indicators are flashing signals that the loss of upside momentum is underway. The MACD has produced a bearish crossover on SPY, GEX has flipped negative, and breadth has weakened. Only 53% of the top 1000 stocks trade above their 50-DMAs (from 74% at the previous top) and small caps (IWM) saw heavy selling. Dark Pools were not major buyers of equities either.
Sentiment plunged to Neutral very fast.
Our Trading Strategy
The primary trend in equities remains bullish and intact, despite the short term pressure. For now, this remains a normal consolidation within an uptrend. There is ample index level support from major Tech stocks, with earnings momentum in AI-leveraged names mitigating broader weakness.
Since we are still trading in the share buyback period and above seasonal averages, the market could see additional selling pressure in the short term. Unless selling accelerates through key support at the 50-day moving average, this pullback could ultimately serve as a reset for an overbought market.
We will be looking for signs of stabilization before re-engaging aggressively on the long side for the final stretch of the year.
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