Volatile environment continues
Hey team. One of the most exciting weeks for the markets across the globe has ended. Let’s re-cap last week’s events and see what’s next for the market !
Impact Snapshot
PPI Inflation - Tuesday
CPI Inflation - Wednesday
Retail Sales - Thursday
Unemployment Claims - Thursday
Consumer Sentiment - Friday
Market Evaluation
This week has been the most volatile for the market in 2024.
The S&P 500 kicked off the week with a 3% drop on Monday, its steepest one-day decline since 2022, driven by escalating recession concerns following disappointing July jobs data.
However, better than expected weekly jobs data helped the index jump 2.3% on Thursday, its largest one-day gain since 2022.
These wild swings brought the Volatility Index (VIX) to levels not seen since the height of the pandemic in 2020.
The main reason behind that volatility was the disappointing U.S. payrolls data from the prior week and concerns the Federal Reserve was too late with rate cuts.
Another key reason being the unwinding of the Yen carry trade, a popular currency trade by hedge funds.
The markets made a return to close the week after the latest US labor-market data helped ease concern about whether the Federal Reserve is easing fast enough to head off a potential recession.
All eyes on this week’s consumer prices report, which traders hope will give the Federal Reserve the confidence it needs to begin cutting interest rates at its next meeting in September.
Markets Breakdown
A unique week for the market has been concluded, triggered by emotions and speculations which saw market swings of 100 points like it was nothing.
As we often say, when an emotional session is underway, it discounts everything.
If the market is on a downtrend and the downside continuation is bringing higher volume, it means that the auction to the downside is not complete and lower prices continue attracting new sellers.
You can build a framework of potential outcomes and be prepared, which is what we’re doing and showcasing every single day on our X feed. Read Friday’s update here.
We ended the week just shy of completely reversing its weekly losses.
Moving forward, the market is well within a balance range formation on an attempt to break from the balance and the key upside reference to watch is the previous gap which the market has a lot of room to go towards to.
A rejection off of the balance highs will lead into a complete roll-over heading into next week if the market loses the 5317 which will trigger a rotation towards the other end of the balance.
ES
Some references we’ll be looking going forward:
Upside Levels: 5420/5434/5452
Downside Levels: 5317/5291/5270
That’s all we got!
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