Where do we go from here? 🧐 - Sunday Report

Hey team.

Hope you all had a nice weekend away from the charts (aside from you weekend crypto degens).

Another Sunday report for you all before a new week of trading.

We’ll cover this week’s big economic events, earnings, and what levels we’re watching.

Let’s get into it…

Weekly Impact Snapshot

• Key Economic Events: ISM Manufacturing(Tues.)Jolts Job Openings(Tues.)ADP Employment Change (Wed.)Jobless Claims(Thurs.)ISM Services(Thurs.)Nonfarm Payrolls(Fri.)Unemployment Rate(Fri.)

• Key Earnings: 

Market Evaluation

In response to the events of last week, the Federal Reserve increased rates for the eleventh time, pushing them to their highest levels since before the 2001 recession, but also sounding more confident than they have in years about the future course of inflation.

Despite the Fed discussing further rate hikes, the meeting’s tone didn’t seem all that hawkish and the GDP numbers of 2.4% growth, has made traders and investors a lot more optimistic about dodging a recession all together.

The so called "soft landing" conclusion to the Fed's hiking cycle, where inflation stabilizes without economic growth taking a significant downturn is “still the view” of Fed Chair Jay Powell. In their terms, the Fed is trying to slow down inflation without triggering a recession. Last year, there were fears of a rapid recession, and policymakers were doubtful about achieving a "soft landing" with reduced inflation without a recession. As we wrote on our previous reports, the market has rejected almost all previous forecasts.Markets enter the month of August with economic data continuing to impress, with a surprise acceleration of economic growth in the second quarter and cooling inflation sending stocks higher.

All three of the major averages closed last week with gains as upbeat results and forecasts from Alphabet and Meta led the tech-heavy NASDAQ higher as the AI frenzy continues to unfold.Since the start of the year, NASDAQ is up nearly 37% while the S&P 500 is up 19% and the DOW with a historic run of 13 positive trading sessions, has gained nearly 7%. To put that into prospective, S&P 500 is -4.9% from All time highs, NASDAQ -11.7% and DOW -4%.If you were unironically shorting the market since the start of the year due to strong influence about recession news across the board, you were adding to the short covering fuel that happened on the markets also known as “pain trade”.

If you were following us along, we’ve made a post 10 days ago about this exact effect on the markets and the consequences of the long-term managers missing out on their mark as last week, again, we made another new year highs.

Don’t forget the key point of this “pain trade” effect that is playing on ES since we got past 4500 as we’ve written previously, “Once the short covering rally is completed, it weakens the market because it removes that forced buying power support, and it will”

They key events next week that you need to pay attention to are the reports from two of the world's largest corporations, and the July jobs report on Friday.

Market Breakdown

During the previous week, the market remained within the range of the prior week for the first three days, indicating a weak high on the daily chart with three closely positioned daily highs.

On Thursday, there was a highly emotional trading session with an initial upward gap, but buyers couldn't sustain the momentum, resulting in an excess high and a breakdown which saw a lot of liquidations rather than new money selling.

The most positive longer term action for current market would see additional liquidation forcing the weaker hands short-term traders out having them replaced by stronger hands traders that are looking at the longer time-frame markets.

Tomorrow, Monday 7/30 which is the end of the month can be confusing with a lot of trading inventory adjustments and dealer re-balancing.

Right now we are on a standoff between the investment world and the trader world between 4500 and 4650 with Friday settled at 4606.

QuantVue’s weekly chart levels to watch:

• Main Level: 20-Day Volume POC at 4585

• Upside Levels: 4630/4650/4689

• Downside Levels: 4583/4558/4524

New Free Indicator

If you didn’t see our Discord announcement, we published our latest free indicator on our TradingView profile.

ATR Extension

We publish NEW indicators for FREE every single week.

You can check our latest one here:

That’s all we got for you in this one.

Happy trading this week!

-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.