open before 9am tomorrow - Big Sunday Brief

Hey traders.

We’re back again with another Sunday brief to get you totally prepped for the trading week ahead.

There’s plenty to digest with recent geopolitical events taking place so let’s just get right into it.

Impact Snapshot

  • PPI Inflation (Wed.)

  • FED FOMC Minutes (Wed.)

  • CPI Inflation (Thurs.)

  • Jobless Claims (Thurs.)

  • Consumer Sentiment (Fri.)

Market Evaluation

A volatile week is ahead of us.

Traders in the upcoming week will be closely watching a critical inflation report and the commencement of the third-quarter earnings season.

The spotlight of economic data will shine on Thursday morning, as the Consumer Price Index (CPI) for September is scheduled to be unveiled.

Anticipated in the coming week, the minutes of the Federal Reserve's September meeting are poised to offer additional clarity regarding the future trajectory of monetary policy. 

A hot September jobs report has further complicated the Fed's next move.

The 334,000 nonfarm payroll additions was unavoidably hot compared to what economists had expected.

That adds upside risks to further rate hikes as the hot job market needs to be met with cooling inflation in order to stay on pace for a coveted "soft landing."

Markets Breakdown

Friday’s surprise rally caught a lot of people off guard leading into a short-covering rally with some long-term activity that was looking for opportunity.

Trading has a lot to do with emotions.

You heard us say “It’s like nobody wants to start a rally but when the rally is going, everyone wants a piece of it”.

It is very likely that the momentum traders will hop in the train and count on a rally trying to “predict” a year end rally.

We talked about short-covering rallies in previous newsletter but a thing you would need to pay attention for any meaningful continuation is the ability for “new money” to enter the market.

Short-covering is old business. People are being forced out their positions.

This can weaken a market as it removes potential buying power.

Unless we see clear evidence that “new buyers” are entering this market to push the prices higher.

Volume will help us discover the interest of buyers in higher prices.

After a 3-day balance, market broke out to the upside targeting the previous balance area above.

Returning to the previous 3-day balance is a negative sign for the market.

If the market is really that strong, we would want to see upward continuation above the identified key areas and some formations of higher highs.

Heading into the upcoming week, all eyes are on CPI inflation this Thursday. 

There are multiple catalyst comming up followed by some serious earnings starting this Friday.

ES

The areas we will be looking at going into Monday’s open:

  • Upside Levels: 4368/4383/4401

  • Downside Levels: 4335/4314/4289

That wraps it up for today’s Sunday brief.

We’ll so you again on Tuesday!

-The QuantVue Team

P.S. — we dropped a new YouTube video today showing step-by-step how to catch profitable trades with our premium indicators. Check it out here: