Market overheated? 🥵 - Thursday Brief

August 31, 2023

What’s going on traders.

We’re back with our Thursday market report.

Let’s jump into this one…

Impact Snapshot

  • Initial Jobless Claims in the US decreased by 4K in the week ending August 26.

  • Continuing Jobless Claims rise by 28K, to 1.725 million in the week ending August 19.

  • US Dollar Index stays around 103.40 following Core PCE and Jobless Claims.

  • Earnings: Earnings: 

Market Evaluation

Initial Jobless Claims totaled 228,000 in the week ending August 26. It is the lowest reading in four weeks. 

The S&P 500 edged higher, while still heading toward its worst month since February.

European markets were higher Thursday after the release of preliminary euro zone inflation data and UBS posted its first set of results since the bank completed its takeover of Credit Suisse

Asia-Pacific markets were mixed Thursday as China’s factory activity contracted for a fifth straight month in August.

The Fed’s preferred measure of underlying inflation posted the smallest back-to-back increases since late 2020, encouraging a burst of consumer spending and feeding growing expectations that the economy can avert a recession.

Markets Breakdown

Wednesday’s session offered opportunities for both sides as we traded within a tight range between the key zones we were watching on the upside bullish scenario at 4514 and 4534.

On the overnight post we’ve made, we highlighted the importance of the 4514 zone and flipping it into a clear support in order to find continuation above.

The markets started to rally out of the gate at the NY session open, reaching the area of 4530 which triggered selling activity and pushed the prices back to the rolling VWAP for another re-test of 4514.

TA 101: Once an zone of resistance gets broken, on the way to re-test it as a pullback zone, it has high probability of acting as the support of the range.

Once we’ve tested the range above 4514, it was obvious that the price found acceptance into a new value area which we would be looking to re-test the previous high.

After claiming 4514 again, bulls launched another upside move from the exact level of 4514 which offered a good long opportunity with target the previous area of 4530.

The price rejected on the same target zone of 4530 and pulled back to our key zone of 4514 which saw a 3rd attempt to reclaim back above in the closing hours.

This session was characterized by exhaustion from the bulls, which, after a strong rally to the upside, they were faced with resistance that would take a lot more effort to breakout from which usually requires a catalyst.

In today’s session for ES, the overnight session remained within the value area of yesterday’s RTH session and edged higher towards the 4539 area we were watching as the first upside resistance. The plan remains the same to the post we’ve made on Twitter(X).

ES

The targets we look for until NY close:

  • Main pivot: 4514

  • Upside Levels: 4539/4552/4574

  • Downside Levels: 4496/4458/4442

That wraps up today’s brief.

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Enjoy your weekend! We’ll see you Sunday.