The Market Brief
Hey team. The first full week of trading for the year will bring a slew of economic reports, continuing the volatile theme we’ve experienced over the last two weeks.
Let’s recap the last trading session and see what’s ahead!
Impact Snapshot
ISM Services PMI - Tuesday
JOLTS Job Openings - Tuesday
ADP Non-Farm Employment Change - Wednesday
Unemployment Claims - Wednesday
FOMC Meeting Minutes - Wednesday
Non-Farm Payrolls - Friday
Unemployment Rate -Friday
Macro Viewpoint
U.S. stocks bounced back on Friday, closing out a holiday-shortened week that marked the start of the new year with hopes for additional Federal Reserve rate cuts and more relaxed regulatory policies under the incoming administration.
After a strong rally, stocks showed some volatility at the end of December and early January. The S&P 500 ended 2024 with a 23% gain, marking its best two-year performance since the 1997-1998 period.
The stock market is set to face its first significant challenge of the year next week, as investors await the U.S. jobs report for insights into the economy’s health. A stable yet modestly growing labor market could reinforce expectations for continued equity gains in 2025.
Key employment data are on the horizon, with ADP's monthly employment report scheduled for Wednesday and the Labor Department's official report due Friday.
Prior Session Deep Dive
A very common quote we use in these Substacks is that being prepared means you’re not surprised when something happens, and you’re ready to act at a moment’s notice when it does.
You don’t know exactly what will happen in these markets. Unless you’re a portfolio manager at a major fund, on the phone with an investment bank getting quotes to enter a position to buy or sell blocks of equities, you don’t really “know.”
What you can have is a framework of potential scenarios, enabling you to act and respond effectively. Momentum in the market is the leading indicator. Our job is to add context to that momentum.
As anticipated during Friday’s session, after opening inside the midpoint and value area of the prior session, the market faced significant initial chop. This is yet another market nuance we shared in our previous Market Brief, which played out as expected.
In the initial hours, the market rejected the key “flip zone” reference three times before finally “flipping” it into support. This triggered the bullish scenario, with the market targeting it’s true objective for the session towards the game area seen on the chart.
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