September 6 Market Update | Technical, Fundamental, News
Description:
An analysis for the week ahead.
Points of Interest:
Excess High; Poor Structure; $3,200 HVN.
Technical:
Broad-market equity indices ended the week lower with the S&P 500 correcting nearly 7%.
Recapping last week’s action, alongside bets of an economic revival backed by prolonged central bank support, the S&P 500 established an overnight all-time high, prior to correcting lower, below value, and trading responsively into the close. On up-beat manufacturing data, Tuesday’s trade built on the prior day’s positive delta, finishing higher on a late spike.
Fueled by momentum in tech, Wednesday’s session opened on a gap, accepted the prior day’s spike, and placed initiative buyers firmly in control. After a brief test lower, regular trading discovered prices higher, leaving value and delta behind. At one point sellers finally entered and established excess on a spike high, suggesting the area could be resistive on subsequent tests.
Indices dropped overnight, Thursday, ahead of economic releases, catching up to the prior day’s divergent delta. After an open below the prior day’s excess, participants rejected higher prices and fueled an emotional liquidation which repaired numerous sessions worth of poor structure. In Friday’s auction, participants continued the push lower before rejecting the low-volume area at $3,400 on a virgin test, and rotating back to test the supply area near $3,460.
Overall, despite the speculative call-side activity in large technology names which forced dealers to hedge in the direction of the trend, prices did manage to auction high enough to attract stronger selling. Given the immense amount of poor structure created by the short-term, momentum-driven participation, it’s no wonder why the corrective action was so fierce.
Whether this sell-off is nothing more than a short-term inventory correction, the presence of additional poor structure below us, coupled with a mixed fundamental picture, suggests there may be more downside in play. That said, heavily-weighted index constituents are in an uptrend, while major market indices are in a short gamma, high-volatility environment.
Regardless of trend or volatility, it’s time to closely assess how far indices have come and the potential for further upside.
Scroll to bottom of document for non-profile charts.
Fundamental:
Given the market’s strength going into the U.S. presidential election, ARK Invest CEO and CIO Catherine Wood suggested the multiple structure of the market will continue rising, given the deflationary nature of innovation. bit.ly/2ZaAMV0
“The P/E ratio of the S&P 500, right now, is at about 26 times on this year’s earnings and about 20 to 21 on next year’s earnings. Now, we should be looking into next year -- the market is a discounting mechanism. But, to the extent a correction makes people a little more focused on the short term, they’re looking at 26 times this year, and that typically has been the top of the market.”
“We’re in a deflationary world, thanks to the innovations that are sweeping through the world that are all deflationary in nature. You know the ones we talk about -- our five platforms -- DNA sequencing, robotics, energy storage, artificial intelligence, blockchain technology. As they sweep through the world, there’s going to be a deflationary undercurrent, even as unit growth is very rapid. That is highly positive for P/E ratios.”
Wood finished noting that investors may see multiples as high as 33 to 50 and near term corrections are a test of growth’s resilience in the new age of digital disruption and accelerated innovation.
Key Events:
NFIB Business Optimism Index For August; Employment Trends; Consumer Credit; JOLTS Job Openings; TR IPSOS PCSI; PPI; Wholesale Inventory, Sales; Core CPI; Real Weekly Earnings; Cleveland Fed CPI; Federal Budget.
Recent News:
Federal Reserve’s average inflation targeting underscores lower-for-longer rate view. bit.ly/359pfJB
Market prefers the continuation of Trump, but Biden win wouldn’t be negative. bloom.bg/3h3elYb
Illusions, Perceptions, and Reality: Discussing Stock Splits and Index Inclusions. bit.ly/3lWUU6L
What is next for markets? Investors should position for rising odds of Trump re-election. bit.ly/323s3G5
European Securities and Markets Authority warns of prolonged period of market risk. bit.ly/2ZcnW8L
Berkshire Hathaway (NYSE: BRK.A) cut Wells Fargo & Co (NYSE: WFC) stake. bloom.bg/330g0sl
Canada added 245,800 jobs in August, but the pace of gains shows signs of slowing. reut.rs/2Z9YEbu
Canada has big plans to use hydrogen to cut emissions and produce more oil. reut.rs/2F8u8HI
Demand for jet fuel in the U.S. is recovering faster than in many other markets. bit.ly/3btFgv3
Three ways multilateral development banks can thrive after the COVID-19 pandemic. bit.ly/3206juA
What the Pentagon’s report on China means for U.S. strategy -- including on Taiwan. brook.gs/3hb4IGZ
Used car supply, demand to pressure auto lease asset-backed securities transactions. bit.ly/323g2Ag
Credit implications of higher debt to depend on persistence of shock, policy buffers. bit.ly/3h9MNjW
Reduced steel quotas are credit positive for the U.S., but negative for Brazilian producers. bit.ly/359pfJB
California bans all flavoured tobacco products, a credit negative for tobacco companies. bit.ly/359pfJB
Vanguard will convert its prime fund, the industry’s largest, to a government fund. bit.ly/359pfJB
Oil market’s rebalancing decelerated on slow consumption recovery, output slack. reut.rs/31Zw4ey
Analyzing differences between the 2000 tech-and-telecom bubble and 2020. bloom.bg/2F6LTXV
U.S. employment growth slowed further in August and permanent job losses increased. reut.rs/3jSIUBk
Bank of Canada to revisit inflation-targeting, shadowing the Federal Reserve’s strategy. reut.rs/3i3II1Q
Amazon.com Inc (NASDAQ: AMZN) plans to add 10,000 jobs in Bellevue, Washington. reut.rs/2ZcrbNt
Moderna Inc (NASDAQ: MRNA) could slow COVID-19 trials to add at-risk minorities. reut.rs/2ESz8Rb
Re-evaluation finds Microsoft Corporation’s (NASDAQ: MSFT) JEDI proposal is best. reut.rs/3h2suop
Larry Kudlow expects the Trump administration to unveil aid for airlines in weeks. reut.rs/330jf34
AstraZeneca Plc (NYSE: AZN) starts final-stage trial of COVID-19 virus vaccine. bloom.bg/2F8wdna
Nvidia Corporation (NASDAQ: NVDA) taps Samsung, Micron Technology Inc (NASDAQ: MU) for new gaming chips. reut.rs/2ZaVvrK
U.S. factory activity accelerates as order data jumps to more than 16-½-year high. reut.rs/2Z6AzCg
Airlines urge the U.K. and U.S. to start London, New York passenger testing trials. reut.rs/2Zd3vsl
Carnival Corp (NYSE: CCL) shares surge as cruises prepare to set sail this weekend. reut.rs/3bzQfTx
Pfizer Inc (NYSE: PFE) sees virus vaccine data in the thick of the U.S. election fight. reut.rs/2F3tivT
Key Metrics:
Sentiment: 30.8% Bullish, 27.4% Neutral, 41.8% Bearish as of 9/2/2020. bit.ly/330VhEp
Gamma Exposure: (Trending Lower) 1,920,532,148 as of 9/4/2020. bit.ly/2UpgtRE
Dark Pool Index: (Trending Lower) 36% as of 9/4/2020. bit.ly/2UpgtRE
Product Snapshot:
S&P 500 (ES):
Nasdaq 100 (NQ):
Russell 2000 (RTY):
Gold (GC):
Crude Oil (CL):
Treasury Bonds (ZB):
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:
Excess High; Poor Structure; $3,200 HVN.
Technical:
Broad-market equity indices ended the week lower with the S&P 500 correcting nearly 7%.
Recapping last week’s action, alongside bets of an economic revival backed by prolonged central bank support, the S&P 500 established an overnight all-time high, prior to correcting lower, below value, and trading responsively into the close. On up-beat manufacturing data, Tuesday’s trade built on the prior day’s positive delta, finishing higher on a late spike.
Fueled by momentum in tech, Wednesday’s session opened on a gap, accepted the prior day’s spike, and placed initiative buyers firmly in control. After a brief test lower, regular trading discovered prices higher, leaving value and delta behind. At one point sellers finally entered and established excess on a spike high, suggesting the area could be resistive on subsequent tests.
Indices dropped overnight, Thursday, ahead of economic releases, catching up to the prior day’s divergent delta. After an open below the prior day’s excess, participants rejected higher prices and fueled an emotional liquidation which repaired numerous sessions worth of poor structure. In Friday’s auction, participants continued the push lower before rejecting the low-volume area at $3,400 on a virgin test, and rotating back to test the supply area near $3,460.
Overall, despite the speculative call-side activity in large technology names which forced dealers to hedge in the direction of the trend, prices did manage to auction high enough to attract stronger selling. Given the immense amount of poor structure created by the short-term, momentum-driven participation, it’s no wonder why the corrective action was so fierce.
Whether this sell-off is nothing more than a short-term inventory correction, the presence of additional poor structure below us, coupled with a mixed fundamental picture, suggests there may be more downside in play. That said, heavily-weighted index constituents are in an uptrend, while major market indices are in a short gamma, high-volatility environment.
Regardless of trend or volatility, it’s time to closely assess how far indices have come and the potential for further upside.
Scroll to bottom of document for non-profile charts.
Fundamental:
Given the market’s strength going into the U.S. presidential election, ARK Invest CEO and CIO Catherine Wood suggested the multiple structure of the market will continue rising, given the deflationary nature of innovation. bit.ly/2ZaAMV0
“The P/E ratio of the S&P 500, right now, is at about 26 times on this year’s earnings and about 20 to 21 on next year’s earnings. Now, we should be looking into next year -- the market is a discounting mechanism. But, to the extent a correction makes people a little more focused on the short term, they’re looking at 26 times this year, and that typically has been the top of the market.”
“We’re in a deflationary world, thanks to the innovations that are sweeping through the world that are all deflationary in nature. You know the ones we talk about -- our five platforms -- DNA sequencing, robotics, energy storage, artificial intelligence, blockchain technology. As they sweep through the world, there’s going to be a deflationary undercurrent, even as unit growth is very rapid. That is highly positive for P/E ratios.”
Wood finished noting that investors may see multiples as high as 33 to 50 and near term corrections are a test of growth’s resilience in the new age of digital disruption and accelerated innovation.
Key Events:
NFIB Business Optimism Index For August; Employment Trends; Consumer Credit; JOLTS Job Openings; TR IPSOS PCSI; PPI; Wholesale Inventory, Sales; Core CPI; Real Weekly Earnings; Cleveland Fed CPI; Federal Budget.
Recent News:
Federal Reserve’s average inflation targeting underscores lower-for-longer rate view. bit.ly/359pfJB
Market prefers the continuation of Trump, but Biden win wouldn’t be negative. bloom.bg/3h3elYb
Illusions, Perceptions, and Reality: Discussing Stock Splits and Index Inclusions. bit.ly/3lWUU6L
What is next for markets? Investors should position for rising odds of Trump re-election. bit.ly/323s3G5
European Securities and Markets Authority warns of prolonged period of market risk. bit.ly/2ZcnW8L
Berkshire Hathaway (NYSE: BRK.A) cut Wells Fargo & Co (NYSE: WFC) stake. bloom.bg/330g0sl
Canada added 245,800 jobs in August, but the pace of gains shows signs of slowing. reut.rs/2Z9YEbu
Canada has big plans to use hydrogen to cut emissions and produce more oil. reut.rs/2F8u8HI
Demand for jet fuel in the U.S. is recovering faster than in many other markets. bit.ly/3btFgv3
Three ways multilateral development banks can thrive after the COVID-19 pandemic. bit.ly/3206juA
What the Pentagon’s report on China means for U.S. strategy -- including on Taiwan. brook.gs/3hb4IGZ
Used car supply, demand to pressure auto lease asset-backed securities transactions. bit.ly/323g2Ag
Credit implications of higher debt to depend on persistence of shock, policy buffers. bit.ly/3h9MNjW
Reduced steel quotas are credit positive for the U.S., but negative for Brazilian producers. bit.ly/359pfJB
California bans all flavoured tobacco products, a credit negative for tobacco companies. bit.ly/359pfJB
Vanguard will convert its prime fund, the industry’s largest, to a government fund. bit.ly/359pfJB
Oil market’s rebalancing decelerated on slow consumption recovery, output slack. reut.rs/31Zw4ey
Analyzing differences between the 2000 tech-and-telecom bubble and 2020. bloom.bg/2F6LTXV
U.S. employment growth slowed further in August and permanent job losses increased. reut.rs/3jSIUBk
Bank of Canada to revisit inflation-targeting, shadowing the Federal Reserve’s strategy. reut.rs/3i3II1Q
Amazon.com Inc (NASDAQ: AMZN) plans to add 10,000 jobs in Bellevue, Washington. reut.rs/2ZcrbNt
Moderna Inc (NASDAQ: MRNA) could slow COVID-19 trials to add at-risk minorities. reut.rs/2ESz8Rb
Re-evaluation finds Microsoft Corporation’s (NASDAQ: MSFT) JEDI proposal is best. reut.rs/3h2suop
Larry Kudlow expects the Trump administration to unveil aid for airlines in weeks. reut.rs/330jf34
AstraZeneca Plc (NYSE: AZN) starts final-stage trial of COVID-19 virus vaccine. bloom.bg/2F8wdna
Nvidia Corporation (NASDAQ: NVDA) taps Samsung, Micron Technology Inc (NASDAQ: MU) for new gaming chips. reut.rs/2ZaVvrK
U.S. factory activity accelerates as order data jumps to more than 16-½-year high. reut.rs/2Z6AzCg
Airlines urge the U.K. and U.S. to start London, New York passenger testing trials. reut.rs/2Zd3vsl
Carnival Corp (NYSE: CCL) shares surge as cruises prepare to set sail this weekend. reut.rs/3bzQfTx
Pfizer Inc (NYSE: PFE) sees virus vaccine data in the thick of the U.S. election fight. reut.rs/2F3tivT
Key Metrics:
Sentiment: 30.8% Bullish, 27.4% Neutral, 41.8% Bearish as of 9/2/2020. bit.ly/330VhEp
Gamma Exposure: (Trending Lower) 1,920,532,148 as of 9/4/2020. bit.ly/2UpgtRE
Dark Pool Index: (Trending Lower) 36% as of 9/4/2020. bit.ly/2UpgtRE
Product Snapshot:
S&P 500 (ES):
Nasdaq 100 (NQ):
Russell 2000 (RTY):
Gold (GC):
Crude Oil (CL):
Treasury Bonds (ZB):
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.
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