China deflation cause for panic? 😰 - Tuesday Brief

Morning traders. Back again with our Tuesday brief.

Hope it’s been a green start to the week for you.

If you’re unaware, we send these Sun, Tue, and Thur of each week.

Let’s get into this one…

Impact Snapshot

  • U.S. retail sales in July register biggest gain since January

  • N.Y. fed’s regional factory gauge produces first negative reading since May.

  • Home-builder confidence falls in August for first time in 8 months.

Market Evaluation

We're hearing a lot about “resilience” these days, with the buzzword being applied to earnings, economic data, and consumer spending. 

And as retail week hits its stride with fresh earnings and data, we'll get another look at exactly how resilient the latter is.

Retail Sales in the US rose 0.7% on a monthly basis in July to $696.4 billion. 

This reading followed the 0.3% increase recorded in June and came in better than the market expectation of 0.4%. 

Banks are forecast to further tighten lending standards. The excess savings that shoppers built up over the pandemic is shrinking. 

European markets were lower Tuesday as investors weighed wage growth figures from the U.K. European governments increasingly imposing windfall taxes on profit making businesses.

China posted largely disappointing July data. Emergence from pandemic lock downs has been disappointing, fueling concern the world’s economic engine is sputtering. China’s central bank also enacted a raft of rate cuts.

After a record first half in stock markets, investors are navigating a hawkish Federal Reserve, a China slowdown, and flare-ups across emerging markets.

A devaluation in Argentina and Russia’s emergency rate hike on Tuesday to stem the ruble’s slide added to the risk-off sentiment.

The global markets reacted accordingly as the series of global reports that added disappointing data in the picture reflected in the sell off.

Eyes on the US and the upcoming FOMC minutes and jobless claims this week.

Markets Breakdown

On Monday’s session, price edged higher to reach the strong resistance level which we’ve mentioned several times would have to flip as support in order to get any continuation above.

The price stalled once it reached around the 4497 pivot with no major continuation above.

What we want is buyers interest to show above 4497 to get a clear acceptance which we did not get as the prices fell below the pivot on Tuesday’s ON session.

The presence of buyers was the key indicator that they are willing to show up in order to target the next continuation levels we’ve mentioned.

“Weakness” is the word to better describe the global markets and the RTH open for today’s session.

The NY session today opened with a gap bellow our pivot which targeted a bounce off of 4470 which was the first downside target we were watching for ranging bellow the pivot.

The market further pulled back as the aggression of sellers managed to bring the prices down to the next downside target of 4458.

Intraday levels of the day were posted here: https://twitter.com/getquantvue/status/1691386957761310721?s=20

ES

The higher time frame targets we look at:

  • Main pivot: 4497

  • Upside Levels: 4522/4557/4593

  • Downside Levels: 4442/4427/4400

That’s it for today. Another report coming this Thursday.

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We’ll see you Thursday!

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