Market Wrap
Sentiment
Inflation is a key focus due to its persistence, however, signs of moderation are observed. Analysts anticipate a gradual global inflation decrease and predict the Federal Reserve would start cutting rates by December 2024, reflecting the balance between managing inflation and supporting economic growth.
Despite resilience in the labor market, there are signs of decreasing consumer demand. Investors show interest in hedging strategies despite the positive market performance, indicating caution.
Potential risks include a potential economic slowdown, geopolitical tensions escalation, and an economic deceleration in China. Conversely, more persistent inflation, stronger global growth, and faster monetary policy easing if inflation declines rapidly are potential upside risks — Claude 3 Opus (Sources: Yardeni Research, Bank of America, Goldman Sachs, LSEG, Nomura, Oppenheimer)
Week Ahead
Alongside the PCE data, changes in consumer spending and income, projected to show slightly accelerated increases, will be monitored. The third estimate for Q1 GDP growth will provide insight into the overall economic health of the country. Other reports to watch include the goods trade balance and durable goods orders, which can offer valuable insights into the state of trade and consumer confidence.
Regional Purchasing Managers Indexes (PMIs), housing market indicators, and speeches from several Federal Reserve officials will also draw attention. PMIs, including the Dallas Fed Manufacturing Index, Richmond Fed Manufacturing Index, Chicago Fed National Activity Index, and Kansas Fed Manufacturing Index, reflect the health of the manufacturing sector. Housing market indicators, such as the S&P/Case-Shiller home prices, Federal Housing Finance Agency (FHFA) house prices, along with new and pending home sales, provide insights into the housing market — Trading Economics
Earnings
Metric | UpDn | This Week | Prior Week | Baseline | Baseline TF |
---|---|---|---|---|---|
Forward 4-qtr Estimate | 🔵 | 253.54 | 253.42 | 243.98 | January 1, 2024 |
Forward 4-qtr PE | 🔵 | 21.6 | 21.4 | 20.16 | January 1, 2024 |
Nominal Earnings Yield | 🔴 | 4.63 | 4.73 | 5.19 | January 1, 2024 |
Options
Metric | UpDn | This Week | Prior Week | Net CHG | % CHG |
---|---|---|---|---|---|
SPX Implied Volatility | 🔵 | 10.7 | 9.98 | 0.72 | 7.21% |
SPX GEX Flip | 🔵 | 5,447.5 | 5,362.5 | 85 | 1.59% |
SPX Skew Adjusted GEX | 🔵 | -761,652,449 | -3,131,233,870 | 2,369,581,421 | 75.68% |
Equity Put/Call Ratio | 🔵 | 0.63 | 0.58 | 0.05 | 8.62% |
VIX Put/Call Ratio | 🔵 | 0.52 | 0.24 | 0.28 | 116.67% |
SPX/W Put/Call Ratio | 🔴 | 1.34 | 1.58 | -0.24 | -15.19% |
Futures
Bull v Bear
This Week: 30d ATM IV 10.50% v 30d HV 7.44% +3.06%Bulls will seek to recapture DTF 1TFU and ideally price acceptance above M30 FVG 5562(+0.50%) on a closing basis. Upside: Weak ATH 5588 (+0.97%) is within +1σ (W) 5621 (+1.57%).Bears will seek to extend DTF 1TFD and ideally break and hold below 5500 (-0.62%) on a closing basis. Downside: < WLO 5489.75 (-0.80%) is within -1σ (W) 5450.00 (-1.52%).
Last Week: 5534.25 SEP24 +0.62%Bulls will seek to recapture DTF 1TFU and ideally price acceptance above ATH 5519.50 (+0.31%) on a closing basis. Upside: 5600 (+1.78%) is above +1σ (W) 5585 (+1.50%).Bears will seek to break and establish price acceptance below 5462.50 LVN on a closing basis. Downside: 5427.50 (-1.37%) FVG & Swing MID iswithin-1σ (W) 5423.00 (-1.44%).