August 30 Market Update | Technical, Fundamental, News
Description:
An analysis for the week ahead.
Points of Interest:
Minimal Excess; Untested POCs; Gaps
Technical:
Broad-market equity indices ended the week higher with the S&P 500 establishing a new all-time high on broad gains from all sectors.
Recapping last week’s action, Monday’s higher open on the FDA’s approval for emergency use of antibody-rich plasma on COVID-19 patients, was followed by a balanced, low-volume session which migrated value higher. On Tuesday, the market continued squeezing overnight on positive trade news and supportive delta, before correcting inventory down to a prior session low-volume area, and making a failed attempt at the overnight high.
Wednesday’s U.S. session resolved Tuesday’s overnight weak high as investors flocked to momentum. The tone continued through Friday as the Federal Reserve’s policy shift on inflation bolstered gains in all 11 of the S&P 500 sectors.
Overall, in light of the short-term, momentum-driven activity and poor structure on both sides of the market, the risks for a near-term correction have increased. That said, heavily-weighted index constituents are still in an uptrend and all sectors saw gains.
So, as of now, the path of least resistance is still up. However, if momentum was to fade, there’s the potential for a fast-moving correction of the poor structure left behind by the recent anxiety-driven activity.
Scroll to bottom of document for non-profile charts.
Fundamental:
Federal Reserve Chair Jerome Powell unveiled a strategy which will target an average rate of inflation of 2%.
In a statement on the development, Ranko Berich, head of market analysis at Monex Europe Ltd., noted:
“Whereas previously, the Fed would be willing to hike interest rates as the labour market approached estimates of maximum employment, Powell has made it clear that uncertainty around these estimates mean that they will not be relied upon as much in the future. Instead, Powell stated ‘employment can run at or above real-time estimates of its maximum level without causing concern, unless accompanied by signs of unwanted increases in inflation’. This is a clear break with prevailing policy wisdom going back as far as the 1980s - its significance is difficult to overstate.”
The development comes after the Fed’s monetary policy, after the last financial crisis, failed to stimulate economic activity sufficiently to lift inflation over 2%.
As a result, this new shift means the Federal Reserve will tolerate hot inflation and allow employment to drop below inflationary levels.
Key Events:
Dallas Fed Manufacturing Business Index; CoreLogic Home Price Index; ISM Manufacturing and Nonmanufacturing Reports; Vehicle Sales; ADP National Employment; Challenger Layoffs; Jobless Claims; International Trade and Trade Balance; Non-farm Payrolls.
Recent News:
Economic recovery remains tenuous as pandemic fear persists. bit.ly/2Daz2Ds
Banks eye layoffs as short-term crisis ends, long-term costs emerge. reut.rs/3hCF9zo
August surge in corporate bond issuance mostly re-financed old debt. bit.ly/2YJ7Z9S
Per Bank of America Corp (NYSE: BAC), margin debt broke out, and that’s bullish. bit.ly/2ES2xdy
European banks suffer more than US peers in the corona crisis. bit.ly/3hCnBU5
BlackRock Inc Investment Institute’s (NYSE: BLK) 2020 midyear outlook. bit.ly/3gDQk9T
Energy and consumer-dependent industries see most downgrades. bit.ly/2YJ7Z9S
Retail activity in the options market is up 75% over the past 18 months. bit.ly/3gIXWIb
TTM loan default rate climbs for 8 straight months, retail hits 19%. bit.ly/3gBRMte
Walmart Inc (NYSE: WMT) joins Microsoft Corporation (NASDAQ: MSFT) TikTok bid. reut.rs/2Dbnj7E
Boeing Co (NYSE: BA) finds flaws in fuselage of Dreamliner; eight aircraft affected. reut.rs/2EL8QzJ
Venture funds are raising more than ever in 2020, and spending at a good pace, too. bit.ly/31GGAaD
Federal Reserve targets average inflation, signaling it will tolerate an overshoot. bloom.bg/2GeLByZ
NVIDIA Corporation (NASDAQ: NVDA) end-markets boost revenue, a credit positive. bit.ly/3hSG2nq
American Express Company’s (NYSE: AXP) acquisition of Kabbage, credit positive. bit.ly/3hSG2nq
Denmark’s proposed special corporate tax is credit negative for the banking sector. bit.ly/3hSG2nq
China moves ahead with its version of a central bank digital currency, Fed follows. bit.ly/3gGTBVQ
The PMI report shows V-shaped recovery in services and manufacturing sectors. bit.ly/3gGTBVQ
Goldman Sachs Group Inc (NYSE: GS) said 25% layoffs may be permanent. bloom.bg/3hGlm2f
Salesforce.com Inc (NYSE: FRM), Amgen Inc (NASDAQ: AMGN), and Honeywell International Inc (NYSE: HON) to join Dow index on August 31. bit.ly/34JL2Hx
Best Buy Co Inc (NYSE: BBY) warns of slow sales after the work-from-home boom. reut.rs/2YHNUAT
Beyond Meat Inc (NASDAQ: BYND) begins direct online sales of plant-based patties. reut.rs/3beaaXZ
Gold closely linked to liquidity; the more money available, the higher gold trades. bloom.bg/2QzBpD3
Amazon.com Inc (NASDAQ: AMZN) launched its first fitness band. reut.rs/32Kdruy
Facebook Inc (NASDAQ: FB) to pay more than $110 million in back taxes in France. reut.rs/3gJpLQx
American Airlines Group Inc (NASDAQ: AAL) plans to cut 19,000 jobs in October. reut.rs/2QF6dSR
Uber Technologies Inc (NYSE: UBER) plans to expand its services across Quebec. reut.rs/2QCTMa6
Amazon.com Inc (NASDAQ: AMZN) faces antitrust challenges from Indian sellers. reut.rs/2EHFSRw
U.S. and China officials reaffirm commitment to Phase 1 trade deal in phone call. reut.rs/32wVRd2
Sentiment: 33.1% Bullish, 28.3% Neutral, 39.6% Bearish as of 8/26/2020. bit.ly/330VhEp
Gamma Exposure: (Trending Lower) 4,263,904,049 as of 8/28/2020. bit.ly/2UpgtRE
Dark Pool Index: (Trending Lower) 41% as of 8/28/2020. bit.ly/2UpgtRE
Product Snapshot:
S&P 500 (ES):
SPY
SPX
Nasdaq 100 (NQ):
QQQ
NDQ
Russell 2000 (RTY):
IWM
RUT
Gold (GC):
GLD
Crude Oil (CL):
USO
DBO
USL
Treasury Bonds (ZB):
TLT
Disclaimer:
This is a page where I look to share knowledge and keep track of trades. If questions, concerns, or suggestions, feel free to comment. I think everyone can improve, especially me.
In no way should this post be construed as investment advice.
An analysis for the week ahead.
Points of Interest:
Minimal Excess; Untested POCs; Gaps
Technical:
Broad-market equity indices ended the week higher with the S&P 500 establishing a new all-time high on broad gains from all sectors.
Recapping last week’s action, Monday’s higher open on the FDA’s approval for emergency use of antibody-rich plasma on COVID-19 patients, was followed by a balanced, low-volume session which migrated value higher. On Tuesday, the market continued squeezing overnight on positive trade news and supportive delta, before correcting inventory down to a prior session low-volume area, and making a failed attempt at the overnight high.
Wednesday’s U.S. session resolved Tuesday’s overnight weak high as investors flocked to momentum. The tone continued through Friday as the Federal Reserve’s policy shift on inflation bolstered gains in all 11 of the S&P 500 sectors.
Overall, in light of the short-term, momentum-driven activity and poor structure on both sides of the market, the risks for a near-term correction have increased. That said, heavily-weighted index constituents are still in an uptrend and all sectors saw gains.
So, as of now, the path of least resistance is still up. However, if momentum was to fade, there’s the potential for a fast-moving correction of the poor structure left behind by the recent anxiety-driven activity.
Scroll to bottom of document for non-profile charts.
Fundamental:
Federal Reserve Chair Jerome Powell unveiled a strategy which will target an average rate of inflation of 2%.
In a statement on the development, Ranko Berich, head of market analysis at Monex Europe Ltd., noted:
“Whereas previously, the Fed would be willing to hike interest rates as the labour market approached estimates of maximum employment, Powell has made it clear that uncertainty around these estimates mean that they will not be relied upon as much in the future. Instead, Powell stated ‘employment can run at or above real-time estimates of its maximum level without causing concern, unless accompanied by signs of unwanted increases in inflation’. This is a clear break with prevailing policy wisdom going back as far as the 1980s - its significance is difficult to overstate.”
The development comes after the Fed’s monetary policy, after the last financial crisis, failed to stimulate economic activity sufficiently to lift inflation over 2%.
As a result, this new shift means the Federal Reserve will tolerate hot inflation and allow employment to drop below inflationary levels.
Key Events:
Dallas Fed Manufacturing Business Index; CoreLogic Home Price Index; ISM Manufacturing and Nonmanufacturing Reports; Vehicle Sales; ADP National Employment; Challenger Layoffs; Jobless Claims; International Trade and Trade Balance; Non-farm Payrolls.
Recent News:
Economic recovery remains tenuous as pandemic fear persists. bit.ly/2Daz2Ds
Banks eye layoffs as short-term crisis ends, long-term costs emerge. reut.rs/3hCF9zo
August surge in corporate bond issuance mostly re-financed old debt. bit.ly/2YJ7Z9S
Per Bank of America Corp (NYSE: BAC), margin debt broke out, and that’s bullish. bit.ly/2ES2xdy
European banks suffer more than US peers in the corona crisis. bit.ly/3hCnBU5
BlackRock Inc Investment Institute’s (NYSE: BLK) 2020 midyear outlook. bit.ly/3gDQk9T
Energy and consumer-dependent industries see most downgrades. bit.ly/2YJ7Z9S
Retail activity in the options market is up 75% over the past 18 months. bit.ly/3gIXWIb
TTM loan default rate climbs for 8 straight months, retail hits 19%. bit.ly/3gBRMte
Walmart Inc (NYSE: WMT) joins Microsoft Corporation (NASDAQ: MSFT) TikTok bid. reut.rs/2Dbnj7E
Boeing Co (NYSE: BA) finds flaws in fuselage of Dreamliner; eight aircraft affected. reut.rs/2EL8QzJ
Venture funds are raising more than ever in 2020, and spending at a good pace, too. bit.ly/31GGAaD
Federal Reserve targets average inflation, signaling it will tolerate an overshoot. bloom.bg/2GeLByZ
NVIDIA Corporation (NASDAQ: NVDA) end-markets boost revenue, a credit positive. bit.ly/3hSG2nq
American Express Company’s (NYSE: AXP) acquisition of Kabbage, credit positive. bit.ly/3hSG2nq
Denmark’s proposed special corporate tax is credit negative for the banking sector. bit.ly/3hSG2nq
China moves ahead with its version of a central bank digital currency, Fed follows. bit.ly/3gGTBVQ
The PMI report shows V-shaped recovery in services and manufacturing sectors. bit.ly/3gGTBVQ
Goldman Sachs Group Inc (NYSE: GS) said 25% layoffs may be permanent. bloom.bg/3hGlm2f
Salesforce.com Inc (NYSE: FRM), Amgen Inc (NASDAQ: AMGN), and Honeywell International Inc (NYSE: HON) to join Dow index on August 31. bit.ly/34JL2Hx
Best Buy Co Inc (NYSE: BBY) warns of slow sales after the work-from-home boom. reut.rs/2YHNUAT
Beyond Meat Inc (NASDAQ: BYND) begins direct online sales of plant-based patties. reut.rs/3beaaXZ
Gold closely linked to liquidity; the more money available, the higher gold trades. bloom.bg/2QzBpD3
Amazon.com Inc (NASDAQ: AMZN) launched its first fitness band. reut.rs/32Kdruy
Facebook Inc (NASDAQ: FB) to pay more than $110 million in back taxes in France. reut.rs/3gJpLQx
American Airlines Group Inc (NASDAQ: AAL) plans to cut 19,000 jobs in October. reut.rs/2QF6dSR
Uber Technologies Inc (NYSE: UBER) plans to expand its services across Quebec. reut.rs/2QCTMa6
Amazon.com Inc (NASDAQ: AMZN) faces antitrust challenges from Indian sellers. reut.rs/2EHFSRw
U.S. and China officials reaffirm commitment to Phase 1 trade deal in phone call. reut.rs/32wVRd2
Sentiment: 33.1% Bullish, 28.3% Neutral, 39.6% Bearish as of 8/26/2020. bit.ly/330VhEp
Gamma Exposure: (Trending Lower) 4,263,904,049 as of 8/28/2020. bit.ly/2UpgtRE
Dark Pool Index: (Trending Lower) 41% as of 8/28/2020. bit.ly/2UpgtRE
Product Snapshot:
S&P 500 (ES):
SPY
SPX
Nasdaq 100 (NQ):
QQQ
NDQ
Russell 2000 (RTY):
IWM
RUT
Gold (GC):
GLD
Crude Oil (CL):
USO
DBO
USL
Treasury Bonds (ZB):
TLT
Disclaimer:
This is a page where I look to share knowledge and keep track of trades. If questions, concerns, or suggestions, feel free to comment. I think everyone can improve, especially me.
In no way should this post be construed as investment advice.
This is a page where I look to share knowledge and keep track of trades. If questions, concerns, or suggestions, feel free to comment. I think everyone can improve (myself especially), so if you see something wrong, speak up.
