read me before Tuesday's open 👀

Happy Sunday traders. Hope you’re all enjoying the long labor day weekend and spending quality time away from the charts.

We’re back with another Sunday brief to get you up to speed before Tuesday’s market open.

Let’s dive into this one…

Impact Snapshot

• U.S. markets closed Monday for Labor Day holiday

• ISM Services PMI (Wed.)

• Federal Reserve Beige Book (Wed.)

• Initial jobless claims (Thurs.)

• Earnings: 

Market Evaluation

Stocks closed out the last week of August in “rally mode” mode after falling for much of the month.

Nasdaq led gains, rising more than 3% last week while the S&P 500 gained 2.5%. 

After a choppy August, stocks are now entering a historically bad month.

Dating back to 1945, September has historically been the year's worst month for the S&P 500.

Last week, the crucial August jobs report offered the latest evidence the US labor market continues to slow.

With the US economy creating 187,000 new jobs last month while the unemployment rate unexpectedly rose to 3.8% as more Americans sought employment.

The US labor market has cooled significantly over the last two years, ending a recent period of exceptional strength and returning to a situation roughly similar to pre-COVID.

Over the last three months, net growth in nonfarm payrolls has fallen to just above 100,000 per month, sufficient to match population growth but not much else.

The quality of economic data has deteriorated sharply.

Low response rates and the Birth/Death adjustment method used by the Bureau of Labor Statistics (BLS) are likely introducing significant bias and errors into the employment numbers.

The real economy is showing signs of strain with rising delinquencies, defaults, and bankruptcies.

Market-derived Wall Street metrics may not be giving a full picture and properly evaluated inflation metrics suggest we are already below the Fed’s 2% target.

On the economic calendar this week, Wednesday will present investors with the busiest schedule as service sector readings from S&P Global and the Institute for Supply Management are due out in the morning while the Fed's Beige Book will come out that afternoon.

Markets Breakdown

Fed Powell at Jackson Hall was pretty firm about they’re gonna to stay the course on inflation. 

Historically one of the things that has happened in the markets is that the FED and the market has declared inflation over too early.

We are in maximum holiday period which is coming to an end. A lot of the big money were on vacation or not trading.

The volume in the last few days of last week as the market skyrocketed has been very anemic. That is not a particularly healthy sign.

The market has been driven mostly by short-term traders and the volume is an indication of that.

An important thing to note is that we’ve been consolidating on the exact same range for over 3 days now. Sideways price activity is an indication of big trading positions slowly starting to accumulate before they move the markets with agression.

The best way to describe this is like a compressing a spring. 

The more you compress a spring the more potential energy it stores within it.

It’s the same case with the markets.

Building tension before the next trend follows.

Going into the week ahead this is our list of levels we will be paying attention to

ES

Some of the levels we will observe going into the new Week/Month:

• Main pivot: 4514

• Upside Levels: 4558, 4593,4619

• Downside Levels: 4485,4458,4420

That’s all we got for you in today’s big Sunday brief.

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We’ll see you on Tuesday!