Weekly Wisdom: The Trend Is Your Friend

Greetings fellow traders and welcome to your March 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 volatile markets and what we have our focus on going forward.

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

• Markets continued their everlasting push higher this week, making another new all time high with $SPX futures reaching 5157 on Monday and then 5160 on Thursday for two new all-time highs this week, mainly led by semiconductors once again.
• Data for the week began on Tuesday with a beat for final services PMI at 52.3 vs 51.4 expected. ISM services PMI was a miss at 52.6 vs 53.0 expected. Factory orders m/m also missed at -3.6% vs -3.1% expected.  
• Wednesday started off with a miss for ADP non-farm employment change at 140,000 vs 149,000 expected. JOLTS job openings came in-line at 8.86 million, while final wholesale inventories m/m was a beat at -0.3% vs -0.1% expected.  
• Thursday gave us our weekly unemployment claims which came in-line at 217,000.  Revised non-farm productivity q/q was also in-line at 3.2%. Revised unit labor costs q/q were a miss at 0.4% vs 0.7% expected. Trade balance was also a miss at -$67.4 billion vs -$63.4 billion expected.  
• Friday, March 8 ends the week with the official February jobs report at 8:30 a.m. ET.

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

Level Highlights:

• $SPX futures continue to trend higher along with the semiconductors, proving the old adage “the trend is your friend” continues to be a powerful reminder to any counter-trend traders out there.  
• New all-time highs were made once again this week up at 5160.  
• Should $SPX futures close over 5138 this week, this will make for yet another green week, bringing the record to 17 of the last 19 weeks trading higher since the November bottom.  
• The momentum level of 5050 was still held again this week, tested on Tuesday with a low of 5063 coming in for the week that day.  
• Bulls can continue to follow the trend and press for higher as long as we stay above that 5050 level, but market participants should certainly have alerts out for that area should we trade back down next week.  
• We have made another range over the last two weeks of roughly 5060-5130, giving $SPX futures a measured move up to 5200 on the range break.  
• Market participants should also keep watching the $VIX wedge building out, with the $VIX bumping into 15 resistance three times this week. A move over 15-15.50+ in the $VIX should be noticeable enough for markets to sell lower.
• $VVIX 85 is another important level to watch which may trigger the $VIX break out, should this be on the way in the coming weeks.

Upcoming News:

• Monday, March 11 does not bring any meaningful data to start the trading week off.
• Tuesday, March 12 is a big day next week as we get the next inflation report with CPI and core CPI metrics released at 8:30 a.m. ET. Our last CPI report came in hotter than expected, so this report will certainly be watched closely – another hot print will certainly push back rate cut expectations. Markets are expecting a 3.1% y/y print for CPI. Later in the afternoon, there is a 10-year bond auction just after 1:00 p.m. ET. The federal budget balance is released at 2:00 p.m. ET.
• Wednesday, March 13 brings us a 30-year bond auction just after 1:00 p.m. ET. 
• Thursday, March 14 brings further important inflation data with PPI and core PPI metrics set to be released at 8:30 a.m. ET. We’ll also get retail sales m/m, as well as our weekly unemployment claims at the same time. We’ll then get business inventories m/m at 10:00 a.m. ET. 
• Friday, March 15 ends the week with the Empire State manufacturing index, as well as import prices m/m, at 8:30 a.m. ET. This is followed by industrial production m/m and capacity utilization rate at 9:15 a.m. ET. We’ll then see preliminary University of Michigan consumer sentiment and inflation expectations at 10:00 a.m. ET.

Here’s Your Chart of the Week:

Via Goldman Sachs Investment Research, Factset: The $NVDA hype continues on for yet another week, with semiconductors making up a whopping 43% of single name option volume – this hype won’t last forever, but can certainly go on much longer than most anticipate.

Source

SPY Daily Update:

$SPY daily chart making new all-time highs once again this week with no signs of slowing down. 505-503 is a vital support area that may trigger further selling should it be lost in the coming weeks. 

SPY Weekly Update:

$SPY weekly chart is currently working on yet another green week, bringing the streak to 17 green of 19 weeks. Keep watching the $VIX and $VVIX for clues of when this will stop or at least slow down.

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-Patrick Hawe

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*As of 1:51pm ET March 7, 2024

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