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Trading The Week Ahead

A quick look at the trading calendar and some thoughts on what to expect this week

NFP came in strong last Friday with 336k in the employment change. The previous month was also revised higher to 227k. The word revision is mentioned once a month, but in reality, if you try tracking these data points, you notice the data points are provisional for at least 2 months and then they get seasonally adjusted to make the overall changes smoother on a graph. In my humble opinion, 337k is about as useful as a chocolate teapot, and should not be used as a fundamental reason to have a directional bias in these markets.


The news cycle on Mondays open will most probably be covering the 'what ifs' with regards to the Hamas/Israel War. Things should be volatile and even more so if USA v's Iran becomes the overarching theme. I generally sit a Monday out and let the week's range develop.


New Live Traders


The live trading pool has expanded by 2, after a great week of sign-ups to the demo. Trader #81 got off to a flying start with no losers in XAUUSD, so I'll update everyone on their progress and see if we can get some others here who may be struggling to get the directional bias, back on course.


Nasdaq ended last week Bullish


I opened with NFP and War, so I am not expecting the Nasdaq to moon higher, but I have the weekly imbalance on the NDQ100 (tradingview chart) @ 15161 as an area of interest. With 15331-15350 as my bullish target for the week. If the markets really don't like the news that has come out of the weekend, my downside target would be 13806 🤨.


"3Q23 earnings season is just around the corner and expectations are +1.1% y/y growth at the index level" – MS Global-Reflections

I am not a Bear (yet)

If you read this you will come across the musings of an economist who says

"Though the economy remained relatively resilient into H123, with this resilience likely to last into Q323, we see clear signs of slowing momentum and expect the combination of elevated inflation and an aggressive Fed to lead to a mild recession beginning in Q423."

They then go on to explain how GDP is higher, that slowing momentum had not been fully apparent quite yet, but how slowing momentum in the labor market, the banking turmoil earlier in the year, and the potential shutdown in the US government will bring on such headwinds that Q4 is when the real shit hits the fan. I just don't buy it. GDP is higher as the US government spends more. They just conjured up an extra $1 trillion in interest payments. God knows how much the defense budget will go up now.

The graph above shows deficit spending above the baseline and surplus below. When the tax drains are in full effect, the levels of income to the government go into surplus. 2023 has had nowhere near as much tax drain as 2022, so we will see the US economy go into 2024 in a better place in terms of the fiscal buffer. If in mid-November there is a shutdown. My analysis will probably change. We currently have mid-October to see if there are further tax drains as the final due date for extended 2022 Individual Tax returns is due.


The economic calendar starts the week quietly


Expect news headlines to dominate whipsaw price action on Monday & Tuesday.

Wednesday the market stays quiet until the FOMC meeting minutes drop. Volatility returns after Thursday's US CPI.


Inflation


If oil can hover around $80 per barrel this will help moderate inflation in the USA. I have $75 as a target on the monthly chart. The core CPI and PCE have been trending down and it will be interesting to see if we get a bit of a reversal in the headline CPI this week.


Trade what you see

I'll try and update everyone if something happens that I think is out of the ordinary this week, but until then I hope you found this relatively interesting :) For those of you reading this who haven't signed up for the Prop Trading demo, because you were originally here for the analysis, why not give trading with us a try, it's 100% free, so no risk: Buy Now, Click Here, Read This, soon I'll be saying click the like and subscribe to the Youtube channel. Why don't you leave a comment below and let me know what I may have missed?

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