(ALL EYES ARE ON THE CPI DATA THIS WEEK)
August 12, 2024
Hello everyone.
Week ahead calendar
Monday, August 12
2:00 p.m. Treasury Budget (July)
8:30 a.m. Australian Consumer Confidence
Previous: -1.1%
Forecast: 0.5%
Tuesday, August 13
8:30 a.m. Producer Price Index (July)
2:00 a.m. UK Employment Rate
Previous: 4.4%
Forecast: 4.5%
Earnings: Home Depot
Wednesday, August 14
8:30 a.m. Consumer Price Index (July)
8:30 a.m. Hourly Earnings final (July)
8:30 a.m. Average Workweek final (July)
Earnings: Progressive
Thursday, August 15
8:30 a.m. Export Price Index (July)
8:30 a.m. Import Price Index (July)
8:30 a.m. Initial Claims (08/10)
8:30 a.m. Empire State Index (August)
8:30 a.m. Philadelphia Fed Index (August)
8:30 a.m. Retail Sales (July)
9:15 a.m. Capacity Utilization (July)
9:15 a.m. Industrial Production (July)
9:15 a.m. Manufacturing Production (July)
10:00 a.m. Business Inventories (June)
10:00 a.m. NAHB Housing Market Index (August)
2:00 a.m. UK GDP Growth
Previous: 0.7%
Forecast: 0.6%
Earnings: Applied Materials, Walmart, Tapestry, Deere & Co
Friday, August 16
8:30 a.m. Building Permits preliminary (July)
8:30 a.m. Housing Starts (July)
10:00 a.m. Michigan Sentiment preliminary (August)
Previous: 66.4
Forecast: 66.7
Volatility in the US markets early last week moderated by Friday. Monday saw the biggest volatility shock in equities since the onset of the pandemic. Forex markets experienced similar volatility, with an initial flight to “safe haven” currencies like JPY and CHF, followed by a stabilization in USD as markets recovered. USD traders are now looking to Wednesday’s CPI inflation data release, where headline inflation is expected to dip into the 2% range for the first time since 2021. A sharp decline in this data could reignite recession fears, similar to July’s employment report, as traders worry the Fed has waited too long to begin cutting interest rates.
UK data, including employment, inflation, and GDP figures will be closely watched by traders.
MARKET UPDATE
S&P500
Upside potential ahead, but it could be choppy. We could argue that an Elliott Wave 4 has now been completed and that this could signal the resumption of an uptrend and advance on to new highs for the year.
Resistance = 5450/5470 area. If we see a break above these levels then we can see the market rallying toward 5, 570/5,670 area.
Support = 5,200/5,110. If these levels give way, risk reverts to the downside, and we will be eyeing the key 4,950 support area of April 19.
GOLD
Uptrend is in progress, but momentum has slowed.
We should be watching the support level of $2,365/$2,360 area. If this level is broken, then we may see a corrective sell-off back toward the $2,290/$2,275 area.
If the market is able to rally through the $2,500 level, then there is potential for the metal to rally to around $2,550, en route to $2,670.
BITCOIN
It is not yet certain whether Bitcoin has completed its corrective structure from its mid-March peak of $73,794 to last week’s low of $49,577. There could still be a lot of churn. It is possible that we could revisit the lows of last week (or close to it) or even around the $40,000 level before a new bull rally begins, and we move out of this corrective structure. It could be September/October before we see any significant rally in Bitcoin.
QI CORNER
PSYCHOLOGY CORNER
BE PATIENT AND DON’T OVERTRADE
If most traders would learn to sit on their hands 50 percent of the time, they would make a lot more money.” (Bill Lipschutz)
The lesson we can take away from Lipschutz’s quote is the importance of the art of patience. A very common mistake for beginner traders, eager to make a quick profit, is to overtrade. This, inevitably, always leads to increased losses.
Devise a trading strategy/plan and stick to it. Be patient and disciplined and only enter trades where your predetermined conditions have been met. In this way, you can be sure to avoid many unnecessary losses.
Bill Lipschutz, unfortunately, learned this lesson the hard way, He began his trading career as a student, after receiving an inheritance of stocks with a value of $12k. He liquidated these stocks, began trading with the funds, and managed to turn them into $250k.
However, his early success was short-lived. A poor trading decision caused him to lose it all. But he did not give up. This is another lesson we can take from Lipschutz. He continued trading and upon graduation, he joined the Foreign Exchange Department at Salomon Brothers, where he went on to earn an average of $300 million a year for the firm. He is now the Director of Portfolio Management at Heathersage Capital Management, which he co-founded.
SOMETHING TO THINK ABOUT…
Cheers
Jacquie
