Weekly Wisdom: Summer's End

Greetings fellow traders and welcome to your August 31st edition of Weekly Wisdom: Levels to Know and Moves to Look For!

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

Taking a look back on this week, August 28 - September 1:

• Markets roared higher on Tuesday on a big miss in JOLTS job openings, coming in at 8.83M vs 9.49M expected. $SPX futures traded up from a low of 4433 to a high of 4509 as traders embraced the idea of the Fed backing off of future rate hikes with the softer jobs numbers. We also had a big miss in the Conference Board's consumer confidence index coming in at 106.1 vs 116.0 expected.??
• Wednesday had another jobs number miss with ADP non-farm employment change coming in at 177,000 vs 194,000 expected. Later on that morning, the first revision of Q2 GDP q/q was a miss at 2.1% vs 2.4% expected, with the GDP Price Index q/q also missing at 2.0% vs 2.2% expected. The goods trade balance was also a miss at -$91.2 billion vs -$90.0 billion expected. Pending home sales was a beat at 0.9% vs -0.8% expected.??
• Thursday’s weekly unemployment claims were slightly lower than estimates at 228,000 vs 236,000 expected. PCE price index m/m came inline at 0.2% vs 0.2% expected, as well as PCE price index y/y inline at 3.3% vs 3.3% expected. Core PCE price index y/y was 4.20% vs 4.20% estimates, with core PCE price index m/m also inline at 0.2% vs 0.2% expected. Personal income m/m was a slight miss at 0.2% vs 0.3% expected, while personal spending m/m was a slight beat at 0.8% vs 0.7% expected. This was followed by a beat for Chicago PMI coming in at 48.7 vs 44.3 expected.??
• Friday, September 1 gives us updates for nonfarm employment change, average hourly earnings m/m, and the unemployment rate at 8:30 a.m. ET. This is followed by final manufacturing PMI at 9:45 a.m. ET, and then ISM manufacturing PMI, ISM manufacturing prices, and construction spending m/m at 10:00 a.m. ET.

Here's what we are eyeing next week, September 4 - 8:

Level Highlights:

• $SPX futures broke last week’s inside candle to the upside this past Tuesday on the big misses from both JOLTS job openings and consumer confidence. Last Friday, $SPX futures poked through the 4375 level bulls wanted to see hold for a low that day of 4365, only to rally back higher and close up at 4414. We then broke last week's high of 4485 and traded up through 4500 to as high as 4540 this week.??
• Bulls have very quickly taken back control to the point where they may be extending themselves a little too far, too fast. Bulls can ideally hold 4500 - 4485 as support going forward, even if we need to chop sideways for a few days for time correction. A move toward 4580-4600 early next week may be a bit too far, too fast and fail back lower, or require further sideways time corrections.??
• $VIX has come all the way back down into the mid 13s with $VVIX hitting a low of 78 this week in the market’s recent up move. Similar to bulls risking going too far too fast, both $VVIX and $VIX have gone down very fast and could risk a bounce back higher if those continue to press lower over the coming days. Bears need $VVIX to reclaim 85 as a start for any real flushes lower.?

Upcoming News:

• Monday, September 4 markets are closed for Labor Day.
• Tuesday, September 5 we’ll see the update for factory orders m/m at 10:00 a.m. ET.
• Wednesday, September 6 we’ll get the trade balance update at 8:30 a.m. ET. We’ll also get final services PMI at 9:45 a.m. ET., followed by ISM services PMI at 10:00 a.m. ET. The Fed releases their Beige Book at 2:00 p.m. ET.
• Thursday, September 7 kicks off with our weekly unemployment claims at 8:30 a.m. ET., along with revised nonfarm productivity q/q and revised unit labor costs q/q.
• Friday, September 8 ends the week with final wholesale inventories m/m at 10:00 a.m. ET. followed by consumer credit m/m at 3:00 p.m. ET.

Here's Your Chart of the Week:

Via Bloomberg: The recent dollar rally has helped markets pull back from highs these past few weeks - a rising dollar in September will continue to be another headwind for the market, should the DXY resume upwards over the next couple of weeks.

SPY Daily Update:

$SPY daily chart with a big, powerful candle to the upside this past Tuesday on JOLTS and consumer confidence. We are running into some resistance at 453 today after quite a large up move this week. Our next resistance is up in the 455-457 range with support below at 448 and 444.

SPY Weekly Update:

$SPY weekly candle broke last week’s inside candle top the upside on Tuesday. Bulls are certainly back in control now and ideally don’t see any lower than 444 going forward.

T3 Live's Sami Abusaad joins next week's free pro trader Q&A on LinkedIn. Register now!

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-Patrick Hawe

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Disclosures

Patrick Hawe's current positions:

*As of 3:02pm ET August 31, 2023

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