Sustaining strength or setting a trap?
Hey team.
We've got another market brief on $ES for you.
Can the closing strength of Friday’s session carry over to next week?
Let’s discuss all the things we’ll be looking moving forward!
Impact Snapshot
ISM Manufacturing PMI - Monday
JOLTS Job Openings - Tuesday
ADP Non-Farm Employment - Wednesday
ISM Services PMI - Wednesday
Unemployment Claims - Thursday
U.S. Jobs Report - Friday
Market Evaluation
The S&P500 index experienced its first weekly drop since mid-April, yet it concluded May with a strong monthly increase.
This week's economic data showed US consumer spending weakened more than expected in April as outlays on goods fell into contraction territory.
April’s decline in consumer spending likely contributed to the welcomed pullback in inflation. Yet it also may raise the question of how long the economy can hold up.
A fresh government jobs report, due Friday, will offer more insights into the direction of the labor market.
Fed policymakers will pay close attention to those numbers as they continue their quest to tame inflation without breaking the economy.
Markets Breakdown
Friday’s emotional session was contained inside the extreme pivots of our market report for the day, sitting at 5205 and 5307. Read update here.
The “week will end with a bang” comment from our previous Substack was justified with the market seeing an emotional role-coaster session with an initial upside at the PCE inflation report and a pullback of 1% towards 5205 before we saw a bounce right back towards the 5300s area.
When a market is being too short, it can actually strengthen that market for the short term. Once the short covering ends, unless it’s joined by new money buying the market, it can weaken that market because that buying power of shorts having to cover is removed.
The key takeaway here is that the market didn’t find acceptance below the 5200s and everyone that was wrong being too short to get the market towards that reference had to cover, sparking a rally that was feeding on itself from an overly short market open.
Going into Monday’s session our focus will be acceptance back inside the previous balance with a clear flip of 5318 as support. Failure to build value above 5300s will lead to a re-test of 5272 where bulls must defend.
ES
Some references we’ll be looking heading into the Monday open
Upside Levels: 5318/5339/5350
Downside Levels: 5272/5255/5232
That’s all we got!
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