US downgrade just noise or real concern? 🧐

Morning traders. Happy Thursday!

Hope you’ve all had a nice week on and off the charts.

In today's Thursday Report (we send these every Sun, Tue, Thur) we’ll breakdown our thoughts on the Fitch downgrade, and what levels we’re watching for on ES and markets overall.

Let’s get into it…

Oh, before we do that we just launched our Substack referral rewards.

Share our Substack with your friends and get rewarded for it!

Here’s the reward tiers (indicators = our premium TradingView toolkit):

Impact Snapshot

• Earnings Today: , , ,

• U.S. productivity picked up in second quarter

• U.S. first-time jobless claims rise to 227,000 in latest week

• U.S. factory orders climb in June

• Tomorrow 8/4 : Nonfarm Payrolls / Unemployment Rate

Market Evaluation

The whole “Fitch downgrade” was pretty much an excuse for the markets to pullback and re-test the previous zones. “Stocks were under pressure on Wednesday after the Fitch cut the rating on US debt to AA+ from AAA.“

The NASDAQ sank 2% while the S&P 500 suffered it’s first 1% down since May. A similar downgrade by S&P Global ratings happened in August 2011. The current market action is far more muted in comparison to what happened back in 2011.This was simply an “excuse” for the pullback rather than a major “catalyst” for the markets. It didn’t change anything.

What it simply did was shaking off the short-term traders and allow the long-term investors to position themselves in the major zones.

When we are talking about healthy continuation we want to see pullbacks to re-test previous major zones we’ve broken out of. Since 2 weeks ago we were talking about the short covering rally “pain trade” and the consequences to the market’s health once it stops considering it was added support for this rally after we’ve made a breakout above 4500 key zone.What we want to see moving on, is the major zone of 4500 holding as the pivot for a continuation.

On the global markets front, EU stocks hit a three-week low, weighed by disappointing earnings and data pointing to slowing business activity in the euro zone.

Chinese stocks rose, led by gains in financial shares after state media said wealth effect via stock investing gains would help boost household consumptionWhat you really need to pay attention to until the end of the week is today’s major earnings of and on the aftermarket hours will play a major role for the next major move as well as the Nonfarm Payrolls and Unemployment rate tomorrow.

Where markets go next may depend on what happens after Today’s closing bell, when Apple and Amazon, whose market capitalization combined make up more than 10% of the S&P 500’s total value, will deliver their earnings.

Their results may hold the key to any market rebound.

Markets Breakdown

Yesterday’s session saw a gab to the downside due to the whole new's about the “Fitch downgrade” . The sell-off continued to the ON session today with the price reaching the final bearish target which we spoke above on yesterday’s twitter post.

Trade breakdown of the ON session going to RTH. Read the post of the ON Here

Pay attention how we highlighted the fact that 4525 needs to hold as support 4 hours ago, even if the price was exactly at that level at the time of the post, we knew the price WAS NOT accepted above at the time in addition to declining volume while approaching this key area.

Getting accepted to the next value area level means we get inside the previous day's VA and manage to hit the POC then retrace back to the resistance of 4525 and hold it as the support flip for continuation.

This was another trap for the bulls that over extended and a nice 0.50% profit move for those that shorted above the 4525 back to our pivot support of 4510. Level by level.

Moving on until the close for today’s session going into Friday, we can expect volatility and price to test some major zone. On the HTF 4h we are approaching the trendline which allign with the 4500 level, we can expect bulls trying to defend this zone at all costs. Getting acceptance below this zone will turn things ugly.

ES

The targets we look for until NY close & Targets to pay attention Tomorrow:

• Main pivot: 4510

• Upside Levels: 4525/4548/4565

• Downside Levels: 4493/4476/4445

That’s it for this week’s Thursday update.

If you found value in this report and our weekly reports overall, share them with a friend!

Here’s the referral reward tiers:

We’ll see you in the next one.

-The QuantVue Team

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.