Open me before Monday's open 👀 - Sunday Report

August 27, 2023

What’s up fellow traders. Hope you’ve all had a nice weekend!

Big Sunday report coming in hot before another trading week unfolds tomorrow.

Let’s dive right in…

Impact Snapshot

  • JOLTs Job Openings (TUES.)

  • ADP Payrolls (WED.)

  • Q2 GDP (WED.)

  • Pending Home Sales (WED.)

  • CORE PCE Inflation (THURS.)

  • Jobless Claims (THURS.)

  • Nonfarm Payrolls (FRI.)

  • Unemployment Rate (FRI.)

  • ISM Manufacturing PMI (FRI.)

Market Evaluation

Entering the final week of the August, the Nasdaq, S&P 500, and Dow Jones Industrial were all in the red over the last month.

After a summer full of stronger than expected data, Powell acknowledged the Federal Reserve is taking notice during a speech on Friday.

Jerome Powell said Friday that the US central bank is prepared to hike interest rates further if necessary and expects to maintain high borrowing costs until inflation is clearly headed in the direction of the Fed's 2% target.

Meanwhile, with inflation proving sticky and the US ramping up Treasury issuance, hedge funds are leaning into short bets.

After peaking at 4.36% during the week, the highest since 2007, the 10-year yield closed the week just around 4.2%.

We’ve stressed the importance of paying attention to the correlation between the 10Y and the stock markets on several posts for a good reason.

Going into next week, the economic calendar will bring two of the Fed's key data points into focus. A labor report and an updated look at inflation.

CORE PCE Inflation is scheduled for Thursday morning while the August Jobs Report is expected Friday. Make sure you pay attention to those.

Markets Breakdown

Our overnight post on Twitter (X) on Friday was pointing out the key zones to watch for the intraday, taking into account the volatility that was expected to follow up while Powell was speaking.

Despite the volatile session, the price ranged between our intraday targets perfectly.

The main focus was the acceptance and a flip of 4396 QV’s pivot as a support zone in order to find any meaningful continuation above and use it as the leg to the upside for the bulls to hit the targets.

Price found acceptance above after testing the 4396 several times as we managed to range and consolidate above and a pullback towards 4396 was quickly bought up by buyers to fuel the leg up towards the first target of 4413.

After we' hit the resistance of 4413 the price quickly traced back towards the support of 4396 which buyers took control and successfully broke out with a leg up from 4413 to reach the final upside target of the day of 4424.

Once we’ve reached 4424, we triggered significant selling activity and a pullback occurred towards the support zone of 4496 which failed to halt the selling pressure and the next pullback zone we were watching was the 4370.

As we pointed out on the overnight post, rejection from 4396 would lead to the first support target of 4370.

Price reached 4370 and selling aggression absorbed by buyers which were quick to buy the dip and take priced back to the pivot.

After the bounce from 4370, we re-tested the 4396 pivot until we got accepted above again which would validate the previous zones to watch for the upside.

Price at the closing hours managed to re-capture 4413/4424 and consolidated exactly between them as the markets closed at exactly 4413.

Despite the extreme volatile session, price ranged between the key pivots we were pointing out for the intraday session and respected the zones of s/r and the continuation that occurred.

Finding acceptance above a pivot for either bulls/bears means continuation towards the next area. Rejecting off of a pivot we always look at the previous zone.

You can read our overnight report Here on Twitter(X) and the followup tweets as the day unfolded. This was a breakdown with insights of how we view the market structure so you can better understand what we are looking for between our levels.

The Week Ahead

Going into the next week, we will observe the ability of buyers to hold 4393 in order to find continuation above.

Bulls want to target a consolidation at 4458 in order to make another higher high towards 4493/4505.

Bears want to lose 4393 and pullback towards 4370/4350. Failure to hold 4350 would trigger acceptance and a rollover towards the other side of the distribution below towards 4306.

As always, those are the zones we will be looking at for the price to find reactions within the upcoming week.

A daily plan will be posted as always on the overnight session on Twitter.

ES

The Key pivots we will look for going into the next week:

  • Main pivot: 4393

  • Upside Levels: 4458/4493/4505

  • Downside Levels: 4370/4350/4306

That’s all we got in this week’s Big Sunday brief.

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We’ll see you on Tuesday.

Cheers!

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.