No data? No problem.
In an almost poetic way the S&P gained 0.75% last week, producing much of the gain on Wednesday when the government shutdown officially went into effect.
Historically aggregated market performance is quite literally 0% during a shut down with half of the cases being positive and half of the cases being negative.
So cast aside any preconceived notions of what you think “should happen” because of the shutdown, and instead, continue to just trade the chart in front of you.
One of the implications of the shut down is the fact that the BLS did not release jobless claims, hourly earnings, non-farm payroll, and the unemployment rate.
For now we go off of the information contained within four reports from last week the JOLTS, ADP non-farm and both ISM Manufacturing & Services reports.
The Data We Did Get…
JOLTS came in first and indicated a slight increase in job openings. However the ratio of job openings to unemployed people remains at 1:1.
ADP non-farm came out the following morning and was a double whammy; Payrolls were -32k and prior months data was revised lower to -3k from +54k.
Finally we can parse out the PMI employment situations:
- Manufacturing – 45.3 vs 43.8 prior; beating estimates of 44
- Services – 47.2 vs 46.5 prior; beating estimates of 46
Overall the labor situation seems to remain stable for those with jobs, but certainly slowing down for those seeking new roles.
As Powell would call it, we remain in a curious balance where cracks have certainly emerged, however nothing is inherently a red flag yet.
If we had to give a forecast of how the BLS report on Friday might have come in, something like this seems reasonable:
- Hourly earnings: 0.3 m/m
- Non-Farm Payroll: +3k (subject to downward revision later)
- Unemployment rate: 4.3%
The below forecast from the Federal Reserve Bank of Chicago agrees:
Keep an open mind to updates on the state of the government shutdown and when the BLS data is scheduled for release.
So far this week the economic calendar is looking light, but if there’s a reopening, be prepared for a volatile open as the market course corrects.
Is The AI Trade Fading?
On Friday, PLTR, TSLA, AMD all had extremely weak closes.
This is not a call for the AI trade to be dead and gone, but typically in an early stage raging bull market you won’t see bearish engulfing action like this that takes back weeks worth of upside consolidation.
There are still many other semiconductor names that are just breaking out: TSM, MU, ASML, NVDA.
Balance this with the continued breakouts we saw in quantum and some AI infrastructure stocks last week. Below are RGTI, IONQ, IREN.
This is just something to consider this as a singular data point that helps provide context as to what phase of the bull market we are in.
Trade Brigade Live Squawk
Make the most of the final trading quarter with live intra-day commentary on breaking opportunities.
Check out this recording for a taste of what each morning session is like: 07/09 Live Squawk
Onboarding support will be available through the evening and Monday morning starting at 6:30am EST before the 8am premarket-prep kick-off.
Broad Market Analysis
SPY – Monthly
Markets see yet another solid green monthly bar with ATH close and higher high higher low combo. If monthly charts pullback, a HL over the pATH would be the best outcome. No indication of that.
SPY – Weekly
No issues on the weekly chart either with a new ATH close and plenty of room for a HL as well. The place where I’d be concerned about a major pullback developing is under the 2 week low (also FOMC low) at 654. No signs of that yet given prior weekly structure.
SPY – Daily
Some very simple levels to be watching this week in terms of the daily trend and its configuration. Generally the Friday inverted hammer makes me somewhat hesitant on continuation just yet. Look above and fail in blue sky. Daily higher low is ideal over 660.4.
SPY – Hourly
Pullback should be the top priority considering Friday’s failure to go higher, however not forcing it if markets decide to balance higher over 670.5 and continue. Ideally a pullback for the daily HL would be healthiest for trend.
Market Internals
Burden of proof is still on the sellers… nothing here overly indicative of new money sellers or panicked buyers headed for the exit. Note the lack of sell side build particularly on Thursday.
Market Profile
Markets pulled back on Friday end of day and value was more central to lower on the individual session, but still higher relative to Thursday’s session. Stronger sellers need value to be moving lower… Not there yet. Note the extremely poor high.
XLV – Daily
Massive breakout here continues to reinforce rotation mode with money starting to flow back into healthcare after the drug pricing announcement on Tuesday. A rotating market is not a crashing market!
If you want the full take, including all of the nuance of breadth, risk appetite and much, much more, check out the weekend episode here:
Economic & Earnings Calendar
Quiet this week. Not listed is the Fed speak peppered through the week. Powell speaks 8:30am EST Thursday morning.
Keep an open mind for BLS data should the government reopen.
Top watches: None… next week kicks off earnings season.
Swing Stock Scans
ADNT – Daily
Start of a bull flag breakout on Friday. The more price can stay over 25.75 the higher the likelihood of trying to rotate up to 28.35.
AEE – Daily
Nice breakout of the daily flag. Now its a matter of clearing the top of the daily range. If price can accept over 103.75, thats new record highs. Higher lows ideally support above the moving average cradle.
BK – Daily
Earning season coming up here so keep an open mind… Dual hammers at the daily 20 SMA and prior breakout level. If we can take Friday’s high, looking for a move into 110.15 area to start the move and then monitor for new highs.
CADE – Daily
Another financial stock with tight range. Over 38.15 can look for a move towards 39.80 from prior resistance. Nice lower wick action through last week supporting the daily 20 SMA.
MRK – Daily
Great daily 3 bar play setting up over prior pivot high after the drug pricing announcement from the White House. If this can hold 87.80 and breakout over 90.6, next target high is 95.3 area.
ROKU – Daily / Weekly
Massive weekly base setting up a possible breakout. Daily has a great looking Brigade Bolt over the top of prior pivot high at 101.85. Over the weekly base high and the next major spot is 139.5 area.