A Week of Economic Data and Bearish Signals: What to Expect
As we head into a new week, the financial markets are at a crucial juncture with earnings and economic data on the horizon. This upcoming week is poised to set the tone for the weeks ahead, and there are some key developments to watch out for.
Market Update
- The S&P 500 has managed to gain approximately 3% since mid-July, reaching a new high. However, the Nasdaq and leading stocks have faced challenges in advancing.
- Bearish patterns have started to emerge in the S&P 500 over the past few weeks, indicating potential downside risks.
Technical Analysis
- A bearish engulfing candle appeared on the weekly chart for the S&P 500, engulfing the previous week’s candle, signaling a possible downturn.
- A rising wedge pattern and a declining RSI trend on the weekly chart further reinforce the bearish signals.
Economic Data to Watch
- The US 10-year yield has been trending higher, with this week’s economic data likely playing a crucial role in determining its future trajectory.
- The JOLTS report on Wednesday is expected to show a drop in job openings, reflecting the data from LinkUp and Indeed.
- GDP data for Q3 is anticipated to reveal 3% real growth and a price index of 2%, indicating a slowdown in nominal growth.
- The US employment data on Friday may see revisions due to recent hurricanes and the Boeing strike, with estimates set low at 110,000.
Analysis
- The discrepancy between analysts’ estimates and the Atlanta Fed’s GDPNow model raises questions about accuracy and potential impacts on rates.
- A higher-than-expected price index could significantly affect nominal growth, with implications for the overall economy.
- As job openings decline and new entrants into the labor force increase, there may be a natural bias for the unemployment rate to rise until a balance is achieved.
- The data from JOLTS and the upcoming job report will provide insights into the labor market dynamics and their effects on economic indicators.
In conclusion, the financial markets are facing a crucial period with a mix of bullish and bearish signals. Monitoring the economic data and market trends will be essential in navigating the current landscape and making informed investment decisions. Stay tuned for updates on these developments as they unfold throughout the week.