read this before market open 👀 - Sunday Brief

Happy Sunday traders!

Hope you all had a nice weekend away from the charts and are enjoying some Sunday football. 🏈

We’ve got another BIG Sunday report coming in hot for you guys so you’re 100% prepared for the week ahead.

Let’s dive right into this…

Impact Snapshot

• CPI Inflation (Wed.)

• PPI Inflation (Thurs.)

• Retail Sales (Thurs.)

• Jobless Claims (Thurs.)

• Consumer Sentiment (Fri.)

• NY Fed Manufacturing Index (Fri.)

Market Evaluation

The week ahead is the first full trading week of September. Key inflation data, and a looming deadline for contentious labor negotiations await investors.

The highlight of the week comes on Wednesday morning, When the Consumer Price Index (CPI) for August is set to release. The report is set to show if headline inflation continues to reverse its downtrend as oil prices rise.

Last week markets continued choppy trading that began back in August as concerns over sticky price inflation from an August report on the services sector sent stocks lower on Wednesday, while a decline in tech stocks over fears regarding China's economy weighed on equity markets.

Nasdaq led the losses, falling near 2% during the holiday-shortened trading week. The benchmark S&P 500 dropped 1.1% while the DOW fell 0.4%.

The Federal Reserve's closer focus on core inflation has economists and investors confident the central bank won't raise rates in September.

As of Friday, markets had priced in a 92% chance the Fed holds interest rates steady at the conclusion of its September 19-20 meeting, according to data from the CME Group.

We are experiencing an anomaly where despite rising real risk-free bond yields, there has been no structural re-rating of U.S. equities. 

This challenges traditional discounted cash flow models, which would suggest a substantial increase in corporate earnings growth or a decrease in the equity risk premium to justify the current valuations.

Inflation will be in focus this week with Wall Street expecting another uptick in headline inflation.

Markets Breakdown

We highlighted September as a challenging month in our previous reports. Additionally, we observed a short-term balance and we’ve mentioned several times about the importance of holding the key level of 4500.

As we’ve said, breaking bellow would likely pressure the market. Last week we’ve experienced liquidations across the board and the market arrived at an intermediate term balance.

Looking at the Weekly TF on the ES, we can see we’ve reached the March 2022 high and formed a range balance.

A market in balance indicates to us that key participants want more information prior to establishing a new directional auction.

Monday and Tuesday see no meaningful economic releases. Wednesday and Thursday see meaningful economic releases with CPI on Wednesday and PPI on Thursday.

ES

Going into the next week we will monitor closely the releases of CPI and PPI which will be introduced with volatile sessions, for information of the next directional move as they will play a catalyst role. Here are some levels we will be looking going forward.

The targets we will pay attention going into the week ahead:

• Upside Levels: 4545/4563/4606

• Downside Levels: 4459/4439/4419

That’s all we got for today’s Big Sunday report.

We’ll see you on Tuesday for our early-week market update.

Cheers!

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