A traders’ weekly playbook – moving past Summer markets We move past Jackson Hole with a slight hawkish lean from chair Jay Powell, and this adds increased empathises on US core PCE inflation and US nonfarm payrolls as the big macro event risks. It remains unlikely we get a hike from the Fed in September, but November is shaping up to be a ‘live’ event, where both data points have the potential to throw interest rate expectations around.
When many other G10 central banks are already priced for an extended pause, the Fed potentially going again in November is supporting the USD.
EU CPI garners interest, where a weaker print could see increased expectations the ECB go on an extended pause, with EURUSD possibly breaking trend support. China remains front and centre, as we look at PMI data, as well as headlines on fiscal support/yuan funding costs/property company solvency.
It seems clear that the US exceptionalism story hasn’t gone away – the US remains the best house in the street and the USD is favoured higher. GBPUSD is breaking down, and I favour shorts here, with EURUSD to be sold on rallies or through trend support. The MXN is the powerhouse, with EURMXN biased further lower.
Tactically, I like equity lower, but the set-ups and flow aren’t there at present, and I’d like the VIX index around 20% before having greater conviction on shorts. Gold remains focused on the USD and real rates, although XAUAUD and XAUJPY have been working for those wanting to take gold longs – buying any market in the perceived weakest currency can offer double bubble, although adding an FX leg to the trade can make life more problematic.
The marquee event risks for traders to navigate:
Month-end flows – Month-end rebalancing flows may influence price action this week, with sell-side banks suggesting these flows could support the USD. Looking forward and the seasonals, over the past 15 years, Sept is the worst month for US500, NAS100, AUS200, HK50 and gold returns. The DXY has rallied in the past 6 consecutive September’s. Let’s see if past performance is any guide this time around as we move past the US and EU/UK summer holiday period and the big hitters come back to their desks.
US core PCE inflation (31 Aug 22:30 AEST) – the consensus is eyeing headline PCE inflation at 3.3% yoy (from 3%), with base effects kicking in. Core PCE is expected at 0.2% mom & 4.2% yoy (from 4.1%). We await the Aug US CPI print on 13 Sept, where expectations are we see headline CPI rise to 3.6% (from 3.2%). While expectations are low for a September Fed hike, a hike in the November meeting is priced at 62% and the PCE inflation data may affect that pricing, with the USD may be sensitive to changes in interest rate expectations.
US nonfarm payrolls (1 Sept 22:30 AEST) – The consensus from economists sits at 168,000 jobs (the analyst's range sits between 230k to 120k), with the U/E rate eyed at 3.5% (unchanged). Average hourly earnings (AHE) are expected at 0.3% MoM/4.3% YoY. The 6-month payrolls average comes in at 223k and 12m average at 280k. The US 2-year Treasury is a big USD driver at present, and further moves in yield towards 5.11% would keep the USD bullish momentum going.
US ISM manufacturing (2 Sept 00:00 AEST) – the consensus is we see the index at 47.0 (from 46.4). Some improvement is therefore expected, but the manufacturing index is still likely to show contraction (below 50.0 is contraction). It’s hard to know if the market will run with this manufacturing data point, as its influence on volatility is rarely consistent. US rates markets see very little chance of a hike in the Sept FOMC, but 15bp for November, and this data point will unlikely alter that with inflation and jobs taking the limelight.
EU CPI (31 Aug 19:00 AEST) – The market sees EU headline inflation coming in at 5.1% (from 5.3%), core CPI eyed at 5.2% (from 5.5% in June). The market prices 9bp of hikes (a 36% probability) for the 14 Sept ECB meeting, and 18bp by December - this EU CPI print could impact this pricing. EURUSD finds buyers at trend support (drawn from the March lows), but rallies are to be sold in my opinion – with real risks EURUSD heads towards the May lows (1.0635).
Aus (monthly) CPI inflation (30 Aug 11:30 AEST) – The consensus is we see the monthly inflation read come in at 5.2% (from 5.4%). While we await the Q3 CPI on the 25 Oct, a 5.2% headline CPI print will reinforce expectations that the RBA sit on their hands at the 5 Sept RBA meeting, where the market currently prices no chance of a hike from the RBA at this meeting. We also get the July retail sales report on Monday (11:30 AEST) with expectations of a 0.2% increase MoM, but I wouldn’t expect this to result in AUD volatility unless it’s a big miss/beat. AUDUSD favoured lower for a re-test of 0.6360.
China Manufacturing and Services PMI (31 Aug 11:30 AEST) – The market looks for the manufacturing index at 49.1 (from 49.3), and services at 51.0 (51.5) – while transparency in the data flow is becoming more problematic for traders to price risk, this could be a key piece of data this coming week. Unless CNH forward points move higher again and traders lose positive carry in USDCNH longs, I like USDCNH higher on the week, although AUD could be a more effective play on China this week.
Banxico (Mexican Central Bank) inflation report (31 Aug 04:30 AEST) – In the August policy meeting Banxico guided inflation at 4.6% in Q423 and 3.1% in 2024. Core inflation is eyed at 5% in Q4. The market prices 6 rate cuts in Mexico over the coming 12 months. Despite expectations of easing, EURMXN has been a solid momentum short of late trading to the lowest levels since 2015. The MXN remains the standout major currency in 2024. MXNJPY has gained an incredible 23.1% in 2024.
Fed speakers – Barr, Bostic, Collins, Mester
BoE speakers – Ben Broadbent (27 Aug 02:25 AEST) & Huw Pill speaks (31 Aug 17:15 AEST)
RBA speakers – RBA gov Bullock (29 Aug 17:40 AEST)
BoJ speakers – Tamura (30 Aug 11:30 AEST) and Nakamura (31 Aug 11:30 AEST)
Us500
US500 Futures ~ Snapshot TA / Fibonacci StrategyFollow-up of my " US500 Short-Med Term Outlook " chart.
Updates:
- Removed Horizontal Lines
- Upward Parallel Channel (green) captures recent Bullish movement
- Demand Zone (white box) of keen interest if price action collapses
- Heavy emphasis on Fib Extension (line) & Retracement (dotted) aka Fibonacci Strategy - has been doing a decent job identifying key Support/Resistance levels
- Narrowed time-frame down from 4hr to 1hr for better tracking when loading new bars
Chart looks 'squished' on initial view - this is by deliberate design to capture entire Fib Extension & Retracement (so far) when you're zooming in on chart.
Boost/Follow appreciated, cheers :)
CAPITALCOM:US500 CME_MINI:ES1! CME_MINI:ES2! SP:SPX AMEX:SPY
US500 Will Move Higher! Buy!
Here is our detailed technical review for US500.
Time Frame: 1D
Current Trend: Bullish
Sentiment: Oversold (based on 7-period RSI)
Forecast: Bullish
The market is approaching a key horizontal level 4463.6.
Considering the today's price action, probabilities will be high to see a movement to 4597.3.
P.S
We determine oversold/overbought condition with RSI indicator.
When it drops below 30 - the market is considered to be oversold.
When it bounces above 70 - the market is considered to be overbought.
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S&P500 potential upsidesHey Traders, in today’s trading session we are monitoring US500 for a buying opportunity around 4400 zone, US500 was trading in a downtrend and successfully managed to break it out. Currently we are waiting for a correction in order to see a potential retrace of the trend around 4400 support and resistance zone.
Trade safe, Joe.
Relief led by a new "meme" stockIn the previous article on SPX, we highlighted how MACD was approaching the midpoint (on the daily time frame) and said that a bearish breakout below zero would likely coincide with the price dropping to the area between $4,250 and $4,350. On Friday, SPX temporarily dropped to this area and constituted a new low at $4,335.31 (following the peak in July 2023). Interestingly, that same day, there were news about China’s property giant Evergrande filing for bankruptcy in the USA, and later during the trading, U.S. indices rebounded. On Monday, the relief continued, with the tech sector posting the most significant gains (led by Nvidia, Tesla, etc.). Today, markets are slightly up again, and the main question is whether the selling is done. To get more clues about the answer to this question, we are paying close attention to RSI, Stochastic, and MACD on the daily chart. In addition, we continue to monitor the situation in the Chinese stock market, where there is still a lack of clarity on what regulators will do to stop the unraveling property crisis. To support a thesis about the short-term trend reversing back to bullish, we would like to see SPX holding above $4,400 for at least two consecutive closes. Furthermore, we would like to see Stochastic successfully continue to the upside, and RSI break the bearish structure (on the daily chart). Contrarily, to support a bearish thesis, we want to see MACD stay below the midpoint and Stochastic with RSI fail to reverse. Additionally, we do not want to see a crash in VIX because that would be bullish. We will update more thoughts on the situation with the emergence of new developments.
Illustration 1.01
Illustration 1.01 shows the daily chart of SPX and two simple moving averages. The yellow arrow indicates a looming bearish crossover between the 20-day SMA and the 50-day SMA; if the crossover is successful, it will bolster the bearish case for SPX in the short and medium term.
Illustration 1.02
Illustration 1.02 displays the daily chart of RSI. If RSI breaks above the resistance, it will be slightly bullish. In such a case, we will monitor the distance traveled by RSI after the breakout; the shorter the length, the higher chance of a fakeout.
Technical analysis gauge
Daily time frame = Bearish
Weekly time frame = Bullish
*The gauge does not necessarily indicate where the market will head. Instead, it reflects the constellation of RSI, MACD, Stochastic, DM+-, ADX, and moving averages.
Please feel free to express your ideas and thoughts in the comment section.
DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not be a basis for taking any trade action by an individual investor. Therefore, your own due diligence is highly advised before entering a trade.
S&P500 Target achieved. Now looking for a rebound.The S&P500 index (SPX) hit our 4350 Sell Target that we set on last week's idea (see chart below) and immediately started a two day rebound:
This rebound is taking place just above the 1D MA100 (green trend-line), with the 1D MA50 (blue trend-line) as the Resistance. We've mentioned countless times that the long-term pattern is a Channel Up since the October 13 2022 market bottom and this rebound is taking place after the 1D RSI hit the 33.30, which was the level where the March 13 bottom was priced.
As a result, the current level is a strong candidate for a new long-term buy, targeting 4640 (March 29 2022 High), despite the fact that the previous two correctional waves to a Lower Low declined at least by -9.00%. The bullish confirmation will come when the 1D MACD makes a Bullish Cross. It just touched the top of its 9 month Support Zone.
If however the price closes a 1D candle below the 1D MA100, we will add a sell for short-term profit, targeting the 1D MA200 (orange trend-line) at the bottom of the Channel Up at 4220 (just above a projected -9.00% decline) and then add a second (and final) buy that will naturally target 4640 as well.
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S&P 500 H4 | Bearish reaction off 23.6% Fibo?Price is approaching our sell entry at 4401.43, which is a pullback resistance level, and at the 23.6% fibo retracement. Our stop loss is at 4449.30, which is placed slightly above the 38.2% fibo retracement and it is also a pullback resistance level. Take profit is at 4341.27, which is a multi-swing low support level.
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S&P ⇨long-term predictionhello guys...
as you can see the head of the pattern touched the flip area, this strategy is fascinating for setup!
and then formed a head and shoulders pattern and broke up the neckline very well,
so the target of this pattern is $4630
after that it is more probable if the price retraces to the QML and the neckline, let's see what happens.
______________________________
always do your research.
If you have any questions, you can write them in the comments below, and I will answer them.
And please don't forget to support this idea with your likes and comment
A Traders’ Week Ahead Playbook; destination Jackson Hole The big market themes last week were trading increased China risk and a resilient US economy with higher US ‘real’ yields (TradingView - TVC:US10Y-FRED:T10YIE ) – the result was broad USD strength and global equity weakness. GBP longs also saw tailwinds from the UK data flow, with GBPNOK the best performing major currency pair on the week – Services PMI could test GBP longs this week, although pullbacks should be shallow.
US equity and index options expiry may have played a part in the equity drawdown, with dealer’s net short gamma and delta hedging through shorting S&P500 futures and single stock names. Let’s see how options dealers/market makers deal with this inventory of short positioning/hedges this week, as it may be unwanted - suggesting risk that they buy-back short S&P500 futures hedges (to close), which could cause an early relief rally in equity.
Positioning will play a huge part this week and it wouldn’t take much to see US real rates a touch lower, with the USD following in its wake.
As the new trading week cranks up, news flow on China will drive and should the HK50 and CNH find further selling interest, then I’d be aligned, with a bias to look at short GER40 trades. The China property sector remains the elephant in the room, with the market finding little tangible fiscal support to reprice risk higher – the price action in the HK50 reflects that, with rallies quickly sold into. It’s time for Chinese authorities to step it up.
We get PMI data out throughout the week, but as the week rolls on the attention should turn to Jackson Hole, where Jay Powell takes centre stage. While this forum has been the setting for some bold changes to monetary policy in years gone by, it doesn’t feel like this time around we’ll be treated to such action. The USD remains front and centre this week – biased long, I acknowledge positioning is rich and could easily be vulnerable to profit taking into Powell’s speech.
The marquee data to navigate:
• China loan prime rate decision (21 Aug 11:15 AEST) – after the PBoC surprised the market and eased the Medium-Lending Facility last week, we should see the PBoC ease the 1- and 5-year Prime lending rate by 15bp respectively. Unless we see the Prime Rate left unchanged, Chinese equity markets will likely overlook any policy easing here and funds should continue to shy away from HK50, CHINAH, and CN50 longs. USDCNH finds support below 7.3000, but few are buying yuan with conviction other than to cover yuan shorts.
• Eurozone manufacturing and services PMI (23 Aug 1800 AEST) – the market eyes the manufacturing index at 42.6 (from 42.7) and services at 50.5 (50.9). A weaker services PMI, especially if the data prints below 50 (the expansion/contraction line) and we could see better EUR sellers, with the GER40 eyeing a break of the July lows of 15,500. Tactically warming to EURCAD shorts.
• UK manufacturing and services PMI (23 Aug 18:30 AEST) – the market looks for manufacturing to come in at 45 (45.3) and services at 50.8 (51.5). GBP – the best performing major currency last week - could be sensitive to the services print.
• US S&P Global manufacturing and services PMI (23 Aug 2345 AEST) – with much focus on China’s markets, US real rates and Jackson Hole, there is less concern about US growth metrics. As a result, the outcome of this may have a limited impact on the USD – it is still a risk to have on the radar.
Jackson Hole Symposium – Fed chair Jay Powell will be the highlight of the conference (speaks Sat 00:05 AEST) – again, it’s still premature for Powell to declare victory in the Fed’s inflation fight and will likely emphasise there is still more work to be done. He may also spend time exploring a higher for longer mantra (for interest rates), with a focus on where they are modelling the neutral fed funds rate; possibly one for the PhDs and academics. Powell should re-affirm his view that rate cuts are not in their immediate thinking.
From a risk management perspective, I am sensing Jackson Hole/Powell’s speech to be tilted on the hawkish side, and therefore modestly USD positive. Although given the bull run in the USD one could argue a hawkish Powell is largely priced.
Other Jackson Hole speakers:
• Fed members Goolsbee and Bowman (23 Aug 05:30 AEST)
• Fed member Harker (25 Aug 23:00 AEST)
• ECB president Lagarde (26 Aug 05:00 AEST)
BRICS Summit in South Africa (Tuesday and Wednesday) – It’s hard to see this as market moving and a risk event for broad markets. However, with BRICS countries (Brazil, Russia, India, China, and South Africa) accounting for 32% of global GDP and some 23 countries wanting to join the union, there will be increased focus on their expansion plans. Some have linked the BRICS to an acceleration of global de-dollarization, and while a global reliance on the USD will likely fall over time, the movement is glacial. A common currency for this union – while possibly getting headlines at this summit - is not something that seems viable anytime soon.
Key corporate earnings:
US - Nvidia report earnings (aftermarket) – many will recall the 24% rally in the share price in Q1 earnings (in May) and hope for something similar. Given the incredible run and heavy positioning, it may need something truly inspiring to blow the lights out. The market prices an implied move on earnings is 10.2%, so one for those who like a bit of movement in their trading.
Australia – 68 ASX200 co’s report, including – BHP, Woodside Petroleum, Qantas, Northern Star and Wesfarmers
Volatility stays elevated amid rising uncertaintyIt has been about twenty days since SPX marked a high near $4,607. Back then, we highlighted the importance of watching the Chinese stock market in order to get more clues about what could be waiting for the U.S. indices (specifically, we mentioned a rollover in the Chinese stocks and the spillover effect). Since then, SPX drifted slightly lower, approximately 3.7%. Meanwhile, Chinese indices dropped significantly more. In particular, Hang Seng Index erased more than 10%, and Shanghai Composite Index lost about 5%. While all these figures are not yet all doom and gloom, the weakness in the global markets should not be overlooked easily, especially as we are still seeing the situation in China unravel. Therefore, we are paying close attention to technical indicators like MACD, Stochastic, and RSI on a daily time frame. All three indicators are in a bearish constellation, with MACD approaching the midpoint. If it breaks below zero, it will greatly bolster the bearish case for SPX in the short term. In such a scenario, we would expect SPX to continue falling to the area between $4,250 and $4,350.
Illustration 1.01
Illustration 1.01 shows the daily chart of VIX. Interestingly, the volatility index is staying elevated.
Technical analysis gauge
Daily time frame = Bearish
Weekly time frame = Bullish
*The gauge does not necessarily indicate where the market will head. Instead, it reflects the constellation of RSI, MACD, Stochastic, DM+-, ADX, and moving averages.
Please feel free to express your ideas and thoughts in the comment section.
DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not be a basis for taking any trade action by an individual investor. Therefore, your own due diligence is highly advised before entering a trade.
Breaking down into OPEX We head into monthly options expiry (OPEX) on Friday and that may influence flows and price action in the US500, but for now, the equity bears are starting to get some traction. We saw the bulls try and take price above Monday’s high (4493) but they failed and the index closed not just below the range lows, but through the 50-day MA. Outright shorts remain challenged as implied vol is still so low (the VIX sits at 16.46%) and China could easily bounce (such is the extreme negative sentiment), but traders are betting on downside and the index looks likely to test 4385 in the near term.
US500: Expecting Bullish Continuation! Here is Why:
It is essential that we apply multitimeframe technical analysis and there is no better example of why that is the case than the current US500 chart which, if analyzed properly, clearly points in the upward direction.
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Does weakness in Chinese stocks spell trouble for the U.S. ones?A while ago, we drew attention to the intriguing correlation between the Chinese and U.S. stock markets. In fact, we presumed that if the Chinese economy and stock market were doing well (following the reopening after Covid-19), it would be inherently positive for the U.S. stock market and could postpone a recession to later. From around October 2022, both indices were rising in tandem. However, in March 2023, the positive correlation between the two started to weaken, and the U.S. stock market kept rising while Chinese stocks began to move increasingly sideways, finding resistance above 20,000 HKD. We find this development interesting as specific U.S. stock titles are reaching highly overbought levels, and the general theme in the media continues to be that of “soft landing” and that we have nothing to worry about. Seemingly everyone seems to forget that regional banks started to implode in 1Q23, and without the FED stepping in and providing more liquidity to the market, the situation would have been much worse. Then, on top of that, the FED keeps hiking into a slowing economy with many subtle signs of a recession already presenting themselves. We believe that if the Chinese stock market continues to roll over, then it can potentially lead to the spillover effect.
Illustration 1.01
Illustration 1.01 shows the correlation between the SPX and HSI (Hang Seng Index). It can be easily observed that both indices trended down from October 2021 until October 2022. After that, both indices trended together to the upside until late March 2023, when SPX kept increasing, but HSI began finding resistance above 20,000 HKD.
Illustration 1.02
Illustration 1.02 displays the daily chart of HSI and the resistance area.
Technical analysis gauge
Daily time frame = Neutral
Weekly time frame = Bullish
*The gauge does not necessarily indicate where the market will head. Instead, it reflects the constellation of RSI, MACD, Stochastic, DM+-, ADX, and moving averages.
Please feel free to express your ideas and thoughts in the comment section.
DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not be a basis for taking any trade action by an individual investor. Therefore, your own due diligence is highly advised before entering a trade.
S&P500 On the 1D MA50 after 3 months. Will it hold?Last week we gave a sell continuation signal on the S&P500 index (SPX) after the price failed to break above the short-term Resistance of 4H MA50 (see chart below):
As the price hit the 1D MA50 (blue trend-line) last Thursday for the first time in 3 months, the index found its first long-term Support level. Along with being near the bottom (Higher Lows trend-line) of Channel Up 2 (dotted pattern within the multi-month Channel Up 1), we can attempt the first buy position again and target 4640 (March 29 2022 High). This is a similar situation as May 24 and May 04 (blue circles).
If a 1D candle closes below it though, we will be quick to take the loss and sell the break-out towards the 1D MA100 (green trend-line) at 4350. That is the second long-term Support level, which if broken opens the way for the final one, the 1D MA200 (orange trend-line). The most optimal long-term buy entry will be if the 1D MACD makes a Bullish Cross within the 2023 Support Zone. Potentially that could be near the 1D MA200 and the bottom (Higher Lows trend-line) of Channel Up 1.
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