Weekly Wisdom: China Brings AAPL iPhone Troubles

Greetings fellow traders and welcome to your September 7th edition of Weekly Wisdom: Levels to Know and Moves to Look For!

Now let’s get to what we’re currently seeing in these crazy markets and what we have our focus on going forward.

Taking a look back on this week, September 4 – 8 :

• We had yet another volatile week this week after last week’s rally on the JOLTS numbers from Tuesday. We started the week off digesting the up move from last week, chopping sideways for a few days, before China brought some drama to $AAPL and the rest of the market mid week, dragging both $AAPL and the rest of the markets lower with it.
• Via (Reuters): “Apple fell nearly 4% on Thursday and sparked a selloff in tech stocks after reports that China has widened curbs on iPhone use by government staff in one of the U.S. company’s biggest markets. The world’s most valuable firm was set to lose around $100 billion in market value after suffering its worst one-day drop in more than a month on Wednesday. Reuters reported earlier in the day that Beijing told employees at some central government agencies in recent weeks to stop using their Apple mobiles at work.”
• Tuesday’s factory orders m/m was a slight beat coming in at -2.1% vs -2.5% expected.  
• Wednesday’s trade balance data was also a beat coming in at -$65.0 billion vs -$67.9 billion expected. Final services PMI was a slight miss at 50.5 vs 51 expected. However, markets then fell after ISM services PMI came in with a solid beat at 54.5 vs 52.5 expected.  
• Thursday’s weekly unemployment claims was a beat at 216,000 vs 232,000 expected. Revised unit labor costs q/q were higher than expected at 2.2% vs 1.8% expected and revised nonfarm productivity q/q was inline at 3.5%. 
• Friday, September 8 ends the week with final wholesale inventories m/m at 10:00 a.m. ET. followed by consumer credit m/m at 3:00 p.m. ET.

Here’s what we are eyeing next week, September 11 – 15:

Level Highlights:

• $SPX fell hard this week beginning with the beat on Wednesday’s ISM services PMI, followed by China coming down on the usage of Apple’s iPhones by government employees.  
• Last week we wrote that bulls had taken back control and were looking good, but $SPX futures were approaching a status of “going too far too fast” should we have pushed much higher early on this week. We more or less spent the rest of last Thursday through this Tuesday chopping sideways and resting before Wednesday’s economic data and $AAPL weakness. 
• $SPX failed to hold 4500 and traded down to as low as 4434 on Thursday, ending bullish momentum although the trend is still intact for now. Bulls would really prefer to hold 4420-4400 as a higher low pivot on any further pullbacks or we risk breaking the lows in mid August of 4350.  
• $VIX has been in a very large range going back to late May / early June roughly between 13 and 18. For now, 13 appears to be a floor that bulls should take note to be careful pressing for higher in that area and 18 seems to be resistance. But keep in mind the $VIX can see much higher levels on further sell offs. Do be mindful of the $VIX having a larger move at some point in the future, but for now this continues to range.

Upcoming News:

• Tuesday, September 12 starts off with the NFIB Small Business Index at 6:00 a.m. ET. This is followed by a 10-year bond auction taking place just after 1:00 p.m. ET.
• Wednesday, September 13 is a big day next week as we get our next inflation report, kicking off with CPI m/m, CPI y/y, core CPI m/m, and core CPI y/y all at 8:30 a.m. ET. Looks like markets are expecting a 3.2% print for CPI y/y. Later on in the afternoon there is a 30-year bond auction taking place after 1:00 p.m. ET. We’ll then get the federal budget balance update at 2:00 p.m. ET.
• Thursday, September 14 is another big day next week with a slew of data coming in at 8:30 a.m. ET., including PPI, core PPI, retail sales, core retail sales, and weekly unemployment claims.
• Friday, September 15 ends the week starting with the Empire State manufacturing index update and import prices m/m, both at 8:30 a.m. ET. This will be followed by industrial production m/m and capacity utilization rate at 9:15 a.m. ET. Then we’ll get the University of Michigan’s consumer sentiment and inflation expectations index at 10:00 a.m. ET.

Here’s Your Chart of the Week:

Via Stifel’s Bannister: “4,800 S&P 500 needs a Financial Conditions Index near generational lows; we doubt the Fed wants that …” therefore upside for SPX past 4500-4600 feels challenging for now

Source: https://twitter.com/WallStJesus/status/1699258023976251832/photo/1

SPY Daily Update:

$SPY fell off of 453 resistance late last week and has not looked back since, with selling accelerating all day Wednesday and into Thursday morning. $SPY is now attempting to bounce off of 443, but bullish momentum has certainly been damaged now. 446, 448, and then 450 are some resistance levels that bulls will need to push through, with further support coming in at 441 and 438.

SPY Weekly Update:

$SPY is forming an inside weekly candle after last week’s large recovery, with highs of this week being 451 and lows just under 443. Bulls must defend 440-438 on any further weakness or we could risk going into a bigger picture downtrend on this weekly chart. 

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-Patrick Hawe

Disclosures

Patrick Hawe’s current positions:

*As of 3:09pm ET September 7, 2023

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