Weekly Wisdom: Traders Await PCE In Closed Markets

Greetings fellow traders and welcome to your March 28th 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 25 – 28:

• Markets had a shortened week this week with closures coming tomorrow for Good Friday. Many European markets are also closed on Monday for Easter Monday.
• $SPX futures spent the week digesting the post FOMC gains, giving an inside week as we failed to make new all time highs but also stayed above key momentum levels that bulls have been looking to hold.
• Data for the week began on Monday with a miss for new home sales coming in at 662,000 vs 675,000 expected.
• Tuesday gave us a beat for durable goods orders m/m at 1.4% vs 1.2% expected. Core durable goods orders m/m was also a slight beat at 0.5% vs 0.4% expected. However, the Richmond manufacturing index was a miss at -11 vs -5 expected. The Conference Board’s consumer confidence index was also a miss at 104.7 vs 106.9 expected.
• Thursday’s weekly unemployment claims were a slight beat at 210,000 vs 212,000 expected. Final GDP q/q was a beat at 3.4% vs 3.2% expected, showing the economy is still humming along well. Final GDP price index q/q was inline at 1.6%. Later in the morning, Chicago PMI gave a miss at 41.4 vs 45.9 expected. We then saw beats for pending home sales m/m at 1.6% vs 1.4% expected, along with a beat for University of Michigan consumer sentiment at 79.4 vs 76.5 expected.
• Friday, March 29 markets are closed in observance of Good Friday, but we will still see data for PCE price index at 8:30 a.m. ET.

Here’s what we are eyeing next week, April 1 – 5:

Level Highlights:

• $SPX futures were fairly dull this week overall, giving an inside week as market participants digest the FOMC gains into the quarter end as well as the shortened trading week.  
• $SPX futures have the same momentum level that bulls are looking for and continuing to hold for now, down at 5250 with this week’s low coming in on Tuesday at 5263. The high for the week was made on Thursday at 5316, with the all time high made last week at 5323. 
• Should bulls push us higher next week, $SPX futures have a measured move up to 5375.
• The main factor bears have going for them is the $VVIX coming back down to the major support level of 75, which has bottomed the $VVIX multiple times throughout this calendar year. 
• Bears are looking for the $VVIX to bounce off 75, which should help bring a bid to the $VIX and ultimately some selling to $SPX futures.
• Bulls are looking for the $VIX to keep seeing pressure after breaking down from the ascending wedge we had been pointing out, with an 11 handle for the $VIX in the bulls’ sights. 

Upcoming News:

• Monday, April 1 starts the week off with many European markets closed for Easter Monday.  In the US, data begins with final manufacturing PMI at 9:45 a.m. ET. We’ll then see ISM manufacturing PMI, ISM manufacturing prices, and construction spending m/m at 10:00 a.m. ET.  
• Tuesday, April 2 brings data for JOLTS job openings and factory orders m/m at 10:00 a.m. ET. Multiple FOMC members are set to speak in the afternoon.
• Wednesday, April 3 kicks off at 8:15 a.m. ET with ADP non-farm employment change. We’ll then get final services PMI at 9:45 a.m. ET. This is followed by ISM services PMI at 10:00 a.m. ET. Fed Chair Powell is set to speak at 12:10 p.m. ET.  
• Thursday, April 4 gives us our weekly unemployment claims and trade balance data at 8:30 a.m. ET. 
• Friday, April 5 ends the week with average hourly earnings m/m, non-farm employment change, and the unemployment rate at 8:30 a.m. ET. In the afternoon, we’ll get the update for consumer credit m/m at 3:00 p.m. ET.

Here’s Your Chart of the Week:

Via EPFR, Haver Analytics, Deutsche Bank Asset Allocation:  To no surprise, tech flows have dominated the strength in markets over the past year, but are perhaps starting to fluctuate to the downside slightly 

Source

SPY Daily Update:

$SPY daily chart has spent the holiday week digesting, holding momentum support but unable to break through 525 resistance ahead of the PCE number on Friday.

SPY Weekly Update:

$SPY weekly chart is giving an inside week this week as the daily has spent the week digesting the post FOMC gains.

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-Patrick Hawe

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Patrick Hawe’s current positions:

*As of 2:40pm ET March 28, 2024

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