Tone Changed
Hey team. An eventful week has concluded, marked by another sell-off and a continued move towards the lower reference points. Let’s recap the last market session and see what’s next!
Impact Snapshot
CPI Inflation - Wednesday
PPI Inflation - Thursday
Unemployment Claims - Thursday
Consumer Sentiment - Friday
Market Evaluation
The S&P 500 index dropped 4.2% this week, marking its biggest weekly decline since March 2023, driven by concerns over weaker-than-expected job growth in August and uncertainties about AI demand.
Friday's monthly jobs report revealed that the pace of hiring in the US slowed over the past three months to its lowest level since the pandemic began in 2020.
Despite this, the data left investors doubtful that Federal Reserve officials would choose a significant rate cut at their September 17-18 meeting.
The key question now facing policymakers is whether a modest interest rate cut will be sufficient to maintain economic growth.
The key economic data set to be released later this week will include the much anticipated CPI initiation on Wednesday and PPI inflation with unemployment claims Thursday.
Markets Breakdown
So much about markets is understanding it’s nuances. Most people want to hear an easy way of where to “buy and sell”. The fact is, markets are more complex than that.
Short-term traders tend to focus exclusively on price and become emotionally attached to economic reports without understanding the context behind a move.
Exactly one day prior to the jobs report on Friday, we’ve shared insights of why the market move like it does at these key economical reports. (Read it below).
Following up on our Friday’s pre-market report on X, we’ve warned about the potential of the equal swing low being underway after the emotional upside, right after the jobs report.
Also in that report we’ve highlighted that there would be no change to the downtrend unless the market successfully managed to reach our area of significance.
What unfolded was one of those “perfect traps” that caught a great amount of traders trying to long “thin air” above the settle, getting liquidated with an equal swing lower and triggering our bearish scenario to the tick. Read update here.
We’re not here to predict what the market is going to do.
Trading is all about managing risk and as we’ve warned right after the jobs report, the risk of going long and pilling up on emotions was high instead of looking for safer opportunities at that swing low.
ES
Some references we’ll be looking going forward:
Upside Levels: 5461/5486/5495
Downside Levels: 5381/5351/5334
That’s all we got!
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Disclaimer: Futures and options trading carries a significant level of risk and may lead to substantial financial losses. The content provided in this newsletter is solely for informational purposes and should not be construed as a trade recommendation or financial advice. It is essential for readers to independently assess and make their own investment decisions, taking into consideration their personal financial situation and risk tolerance.