Weekly Wisdom: Markets Rest At Highs

Greetings fellow traders and welcome to your February 29th edition of Weekly Wisdom: Levels to Know and Moves to Look For!

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

Taking a look back on this week, February 26 – March 1:

• Markets have spent the week digesting sideways after seeing further gains and more all time highs from the $NVDA earnings report last week.  
• Data for the week began on Monday with a miss for new home dales coming in at 661,000 vs 680,000 expected. 
• Tuesday brought a few data points including a miss for durable goods orders m/m at -6.1% vs -4.9% expected and core durable goods orders m/m also missing at -0.3% vs -0.2% expected. We then saw the Richmond manufacturing index with a slight miss at -5 vs -4 expected. The Conference Board’s consumer confidence was also a solid miss at 106.7 vs 114.8 expected.  
• On Wednesday, the first revision of Q4 GDP came in at 3.2% vs 3.3% expected while the GDP price index q/q came in at 1.6% vs 1.5% expected. The goods trade balance was a miss at -$90.2 billion vs -$88.4 billion expected. Preliminary wholesale inventories m/m was a beat at -0.1% vs 0.1% expected.  
• Thursday brought us another inflation gauge the Fed pays close attention to with the headline PCE price index m/m at 0.3% and y/y at 2.4%, as expected. The core PCE price index was also as expected, up 0.4% m/m and 2.8% y/y. 
• Thursday’s weekly unemployment claims were higher than expected at 215,000 vs 209,000 expected. Personal income m/m was a beat at 1.0% vs 0.4% expected. Personal spending m/m was in-line at 0.2%. Chicago PMI was a miss at 44.0 vs 48.1 expected. Pending home sales m/m was also a miss at -4.9% vs 1.4% expected.  
• Friday, March 1 ends the week and begins the month of March with final manufacturing PMI at 9:45 a.m. ET, followed by ISM manufacturing PMI, revised University of Michigan consumer sentiment / inflation expectations, ISM manufacturing prices, and construction spending m/m all at 10:00 a.m. ET.

Here’s what we are eyeing next week, March 4 – 8:

Level Highlights:

• $SPX futures have spent the week digesting the $NVDA gains seen last week and have been trading sideways.
• All time highs of 5123 were made for $SPX futures last Friday.
• We have since traded down to a low of 5060 this week, with markets holding the 5050 momentum level bulls want to see hold, but have not been able to push over 5100 resistance.  
• Bulls still have a chance to see their measured move to 5150 as long as they can hold the 5050 momentum area.  
• A close under 5015 would negate the $NVDA gain day and potentially end the market’s uptrend.
• $VIX continues to show the bigger picture divergence, making higher lows on the daily chart despite the market continuing to make higher highs. A move over 15 could trigger further selling in equities, while a collapse back under 13 could result in a parabolic up-move for $SPX futures.

Upcoming News:

• Monday, March 4 does not bring any meaningful data to start the week off.
• Tuesday, March 5 starts the week’s data off with final services PMI at 9:45 a.m. ET. We’ll then see ISM services PMI and factory orders m/m at 10:00 a.m. 
• Wednesday, March 6 begins with ADP’s private employment report at 8:15 a.m. ET. This is followed by JOLTS job openings and final wholesale inventories m/m at 10:00 a.m. ET. Fed Chair Powell is also set to testify beginning around 10:00 a.m. ET. Later in the afternoon we’ll get the latest Fed Beige Book at 2:00 p.m. ET.    
• Thursday, March 7 brings us challenger job cuts y/y at 7:30 a.m. ET. We’ll then get weekly unemployment claims, revised non-farm productivity q/q, revised unit labor costs q/q, and the U.S. trade balance all at 8:30 a.m. ET. Fed Chair Powell is set to continue testifying around 10:00 a.m. ET. The day ends with consumer credit m/m at 3:00 p.m. ET. 
• Friday, March 8 ends the week with the official February jobs report at 8:30 a.m. ET.

Here’s Your Chart of the Week:

Via TradingView.com: A simple daily chart of the $VIX here better displaying the bigger picture divergence forming as the $VIX is making higher lows on the daily chart with the $SPX making higher highs. A move back over 15 in the VIX could trigger some selling in equities, while a move back under 13 could trigger a “crash up” in equities.

Source

SPY Daily Update:

$SPY daily chart has spent the week chopping sideways after making new all-time highs last week after the $NVDA report. Bulls continue to hold well but should mind the $VIX daily divergence building out – 505 is momentum support and 509 is resistance for now. 

SPY Weekly Update:

$SPY weekly chart giving a doji this week as we rest sideways. Is this just a pause before further highs? Or the start of a bigger rest for the market after a historic run beginning last November?

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-Patrick Hawe

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Patrick Hawe’s current positions:

*As of 2:43pm ET  February 29, 2024

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