Weekly Wisdom: Eyes on Friday Jobs Numbers

Greetings fellow traders and welcome to your June 6th edition of Weekly Wisdom: Levels to Know and Moves to Look For!

Now let's get to what we're currently seeing in these volatile markets and what we have our focus on going forward.

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Taking a look back on this week, June 3 - June 7:

• Markets have spent the week making a big recovery higher with the help of falling interest rates.
• $SPX futures made new all time highs mid week at 5373, surpassing the previous all time high of 5368 made near the end of May.
• Data for the week kicked off on Monday with a beat for final manufacturing PMI at 51.3 vs 50.9 expected. We then saw a few misses with ISM Manufacturing PMI coming in light at 48.7 vs 49.8 expected, with ISM manufacturing prices also missing at 57.0 vs 60.0 expected. Construction spending m/m was a slight miss at -0.1% vs 0.2% expected.
• Tuesday brought an update for JOLTS job openings with a decent miss at 8.06 million vs 8.37 million expected. Factory orders m/m were inline at 0.7%.??
• Wednesday delivered updates for ADP non-farm employment change which was light at 152,000 vs 173,000 expected. Later in the morning, the Bank of Canada cut their interest rates by 0.25%. Final services PMI came inline at 54.8. We then saw a beat for ISM services PMI at 53.8 vs 51.0 expected.
• Thursday’s weekly unemployment claims were higher than expected at 229,000 vs 220,000 expected. Revised nonfarm productivity q/q was slightly higher than expected at 0.2% vs 0.1% expected, with revised unit labor costs q/q missing at 4.0% vs 4.8% expected. Trade balance data was better than expected at -74.6 billion vs -76.2 billion expected.
• Friday, June 7 ends the week with data for average hourly earnings m/m, non-farm employment change, and the unemployment rate all at 8:30 a.m. ET. These are followed by final wholesale inventories m/m at 10:00 a.m. ET, with data for the week ending on the update for consumer credit m/m at 3:00 p.m. ET.?

Here's what we are eyeing next week, June 10 - June 14:

Level Highlights:

• $SPX futures, as mentioned above, have spent the week recovering to the upside, including managing to make new all time highs on Wednesday and Thursday of this week.??
• The recovery in equities was greatly helped with another turn around in interest rates, trading back down after bouncing sharply higher last week, with the 10-Year Treasury Yield falling back down to under 4.3% from highs of over 4.6% at the end of May.
• Following the market strength, bulls got what they needed from the $VIX. We mentioned last week that bulls were looking for a close under 13.50 to help boost equities, with the $VIX falling to a low of 12.58 this week.??
• Going forward, bulls definitely need 5300 to hold as support now that we have broken back up higher, with the next target of 5400 in close sight.??
• Momentum bulls may be able to use 5325 as a potential warning trigger should we close back down around that level.??

Upcoming News:

• Monday, June 10 does not bring any meaningful data to start the trading week off.??
• Tuesday, June 11 starts data for the week off with the NFIB Small Business Index at 6:00 a.m. ET. Later in the afternoon there is a 10-year bond auction just after 1:00 p.m. ET.??
• Wednesday, June 12 is a big data day with our latest CPI inflation update set to come out, with CPI y/y, CPI m/m, core CPI y/y, and core CPI m/m all set to be released at 8:30 a.m. ET. Later in the afternoon, we get the next FOMC Federal funds rate decision and FOMC statement at 2:00 p.m. ET. We will then see Powell speak at the FOMC press conference at 2:30 p.m. ET. As of now, there is no change expected for interest rates at this meeting.??
• Thursday, June 13 brings us further inflation data with PPI and core PPI, as well as our weekly unemployment claims at 8:30 a.m. ET. At 12:00 p.m. ET, Treasury Secretary Yellen is set to speak. This is followed by a 30-year bond auction just after 1:00 p.m. ET.??
• Friday, June 14 ends the week with import prices m/m at 8:30 a.m. ET. This is followed by prelim University of Michigan consumer sentiment and inflation expectations at 10:00 a.m. ET. At 11:00 a.m. ET.? Finally, we’ll see the Fed monetary policy report at 11:00 a.m. ET.??

Here's Your Chart of the Week:

Via Goldman Sachs Primebook: At the start of 2023, hedge funds were very light in semiconductors and very heavy in software names…fast forward to present time and we are now seeing the opposite with funds very heavy in semiconductors and very light in software.

Source

SPY Daily Update:

$SPY daily chart has made new all time highs this week with the help of falling interest rates - momentum bulls can now use 531ish as a warning signal should we see a close below there.

SPY Weekly Update:

$SPY weekly chart is looking strong with two lower tails in the past two weeks, signaling buyers at those lower levels - big picture, $SPY is working on forming a weekly bull flat with a potential measured move to 550.

Want to Trade With My Team? Click here!

-Patrick Hawe

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Disclosures

Patrick Hawe's current positions:

*As of 2:55pm ET June 6, 2024

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