Guidance For S&P 500 In The Earnings
S&P 500 Driven By Retail
Retail traders and corporate buy-backs continue to drive the S&P 500 and the broader market.
Notably, over the last 4 weeks, Bank of America institutional clients and hedge fund clients have been net sellers.
Tariffs continue to grab the headlines and add to market volatility.
Japan, South Korea, Canada, Mexico, EU and copper have been singled out for attention by Trump, and the July deadline is now an August deadline.
Collecting revenue from tariffs remains a focus for the Trump administration, and a higher tariff regime is structurally likely.
Earnings Season
Earnings season is now here and will shape the trajectory of markets.
While the S&P 500 is structurally bullish, the quarterly earnings, coupled with guidance for the rest of the year, will be a litmus test.
The analyst consensus price for the S&P 500 at the end of the year has moved up to 6600, and in part, that reflects the recent weakness in the U.S. dollar.
As earnings season progresses, anticipate revisions and guidance to continue to the upside. That will propel the S&P 500 to new all-time highs.
On a cautionary note, borrowing is starting to accelerate with a record amount of leverage in single stock ETFs.
In the first half of this year, retail purchased $2,919 million of single stock ETFs, which is up 200% from the $948 million in the first half of 2024.
In addition, FINRA margin statistics are showing all-time leverage across all markets.
At some point, over the next six to twelve months, that will unwind. All bubbles start with debt and end with debt.
S&P 500 Key Levels
The S&P 500 opens in positive gamma today.
The gamma flip zone has not moved and sits at 6096; the call resistance level is 6284, and the put support level is 5928.
Economic data this week is dominated by inflation. CPI will be reported tomorrow, and PPI on Wednesday.
Retail sales are reported on Thursday.
The impact of tariffs can take four to six months to appear in economic data. The inflation reports this week may give some insight.
Anticipate some volatility and digestion in the S&P 500 at the current levels. The weight of probability is momentum to the upside, and expect any pullbacks to be shallow and bought.
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