CPI...PPI...Jobs...oh my! - 😱 Sunday Cheatsheet

Hey team. Hope you all had a wonderful weekend. Back with another Sunday market report to get you armed & ready for the trading week ahead.

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Alright, let’s get into it…

Weekly Impact Snapshot

• Economic Events:CPI Inflation (Thurs.)Jobless Claims (Thurs.)PPI Inflation (Fri.)Consumer Sentiment (Fri.)

Market Evaluation

Friday’s July jobs report showed hiring continues to slow in the US economy, with 187,000 jobs created last month while unemployment fell to 3.5% and wages rose faster than expected.

With 47 days to go before the next Federal Reserve decision and so many other economic reports in between the one thing that really hasn’t changed was the sense the Fed is close to wrapping up its hiking cycle.

If you’ve been a steady follower of our weekly newsletters you’ve heard us talk about the “pain trade”. 

It’s the market action that causes the most discomfort to the greatest number of players.

It was fueled by the longer term investors being under invested or not having assumed enough risk as they felt the pressure once the market rose and they were forced to buy to be competitive.The rally was in its latter stages being driven mostly by laggard short-term momentum traders.

The next stage that the market will likely be facing will be a more serious liquidation stage. 

In order to get the market to roll over as it has recently, it usually requires a catalyst. 

We’ve said the importance of those catalysts and news driven event that take place before this roll over take place.The initial catalyst was the Fitch just downgraded the U.S. credit rating. A second catalyst occurred following Apple’s earnings on Thursday afternoon.

Apple is a major holding at over 300 ETFs in addition to being overweight in multiple institutional portfolios.

Next week, we need to pay attention on Thursday and Friday for the impactful news of CPI and PPI which will bring a volatile session and could serve as the next catalyst for a directional move.

Markets Breakdown

In the previous week, buyers showed exhaustion trying to establish a new year high as sellers managed to push the prices lower in order to re-test the previous pullback zones.

Monday kicked off with relatively low trading activity which saw a range normal day as buyers failed to establish a new higher high of the previous week.

Going into Tuesday, the market started trending down, successfully breaking support and finding acceptance down bellow on the previous value area. 

Ranging in that area produced a distribution which saw the highs and lows of it tested on Friday as the price reached the 4560 resistance and aggressive sellers took the marked down to the 4493 support.

We successfully identified the Friday’s high and low targets and here is how. 

We pay attention to the fixed range market profile on the left which had the pivot start between 7/10 - 8/1. 

We can identify the low market participation area at the 4560 level which you can see on the yellow box.

These low volume and market activity nodes, will always give the highest probability of rejection until they find acceptance above.

In this case, once we reached this exact level the market aggressively pulled back and made a rotation towards the last target area of support which was 4493.Pay attention the the 2nd yellow box, you can see the R session with the low trading volume and market activity which we placed the last downside target of Friday.

This Single print was the last rotation target for the this market’s move.We can see, even on a market profile plotted 3 days before the events, these areas were visible to identify the key zones as well as observe the construction of the value area taking place bellow.

The second fixed profile between 8/1 - 8/4 can show how the market auction played out.

This move simply tested the high of the distribution and rotated back to the single print of the HTF profile which found the support at the exact levels posted on the ON session.

The Week Ahead

Going into the next week, acceptance down bellow the 4500 level gives a high probability of entering the lower distribution range.

If this occurs there are favorable odds of rotating down to the lower end of the distribution which will be at the low 4400s

Bulls want to reclaim the higher zones and aim to flip 4536 as support again in order to rotate back to the higher zones.

ES

The targets we look for until NY close & Targets to pay attention Tomorrow:

• Main pivot: 4493

• Upside Levels: 4536/4560/4591

• Downside Levels: 4478/4450/4420

That’s all we got for this week’s Sunday brief.

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Let’s have ourselves a great week of trading.

-The QuantVue Team

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.