Daily Market Update 08.04 | Markets are getting tighter and tighter!
MyntBit's Daily Market Update is dedicated to providing traders with a recap and bringing setups to watch for the next trading day.
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Stocks turned in a relatively lackluster performance during trading on Thursday, with the major averages bouncing back and forth across the unchanged line following the rally seen on Wednesday. Despite the choppy trading, the tech-heavy Nasdaq reached a new three-month closing high.
The major averages eventually finished the session mixed. While the Nasdaq rose 52.42 points or 0.4 percent to 12,720.58, the S&P 500 edged down 3.23 points or 0.1 percent to 4,151.94 and the Dow dipped 85.68 points or 0.3 percent to 32,726.82.
The choppy trading on Wall Street came as traders seemed reluctant to make significant moves ahead of the release of the Labor Department's closely watched monthly jobs report on Friday.
The report is expected to show employment increased by 250,000 jobs in July after jumping by 372,000 jobs in June. The unemployment rate is expected to hold at 3.6 percent.
The strength of the jobs report could impact the outlook for interest rates, although the Federal Reserve will have much more data to digest before their next meeting in September.
"Equities might struggle to keep the rally going as investors continue to see economic data that suggests the economy is still holding up and as US-China tensions simmer," said Edward Moya, senior market analysis and OANDA.
"Wall Street has heard enough from the Fed to know that we are stuck in wait-and-see mode for the next 48 days," he added. "The September 21st FOMC decision will have a clear trajectory from both labor market and inflation data points."
A day ahead of the release of the more closely watched monthly jobs report, the Labor Department released a report showing a modest increase in first-time claims for U.S. unemployment benefits in the week ended July 30th.
The report showed initial jobless claims crept up to 260,000, an increase of 6,000 from the previous week's revised level of 254,000.
Economists had expected jobless claims to inch up to 259,000 from the 256,000 originally reported for the previous week.
The Commerce Department released a separate report showing the U.S. trade deficit narrowed by more than expected in the month of June.
The report showed the trade deficit narrowed to $79.6 billion in June from a revised $84.9 billion in May. Economists had expected the trade deficit to shrink to $81.9 billion from the $85.5 billion originally reported for the previous month.
The decrease in the size of the trade deficit came as the value of exports surged by 1.7 percent to $260.8 billion, while the value of imports edged down by 0.3 percent to $340.4 billion.
Sector News
Despite the lackluster performance by the broader markets, gold stocks moved sharply higher on the day, rebounding along with the price of the precious metal.
With gold for December delivery surging $30.50 to $1,806.90 an ounce, the NYSE Arca Gold Bugs Index spiked by 3.1 percent.
Biotechnology stocks also saw substantial strength, extending the rally seen on Wednesday. The NYSE Arca Biotechnology Index jumped by 2.7 percent to its best closing level in well over three months.
Airline, brokerage and housing stocks also moved notably higher on the day, while energy stocks saw further downside amid a continued slump by the price of crude oil. Crude for September delivery tumbled $2.12 to $88.54 a barrel.
Reflecting the weakness in the energy sector, the Philadelphia Oil Service Index plummeted by 4.7 percent, the NYSE Arca Oil Index plunged by 3.3 percent and the NYSE Arca Natural Gas Index dove by 2.9 percent.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Thursday. Japan's Nikkei 225 Index climbed by 0.7 percent, while China's Shanghai Composite Index advanced by 0.8 percent.
Most European stocks also moved to the upside on the day. The German DAX Index and the French CAC 40 Index both rose by 0.6 percent, while the U.K.'s FTSE 100 Index closed just above the unchanged line after the Bank of England announced its biggest interest rate hike since 1995.
In the bond market, treasuries moved notably higher after ending the previous session little changed. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, slid 7.2 basis points to 2.676 percent.
Looking Ahead
The monthly jobs report is likely to be in the spotlight on Friday, as traders use the data to try to gauge how aggressively the Fed will raise interest rates next month.
On the earnings front, Amgen (AMGN), DoorDash (DASH), Expedia (EXPE), Lyft (LYFT), Warner Bros. Discovery (WBD) and Yelp (YELP) are among the companies releasing their quarterly results after the close of today's trading.
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But, as of now, nothing has changed from our weekly perspective.
/ES - Emini S&P 500
On /ES today, we nailed the 4175 area which ended up being the HOD and where the sellers stepped into the market as mentioned in yesterday's newsletter. The market has been consolidating for the last few session which suggests that the Market Makers are either buying or selling at these levels. Again, 4150 will be a key area for tomorrow.
Bullish Scenario
If we OPEN above again 4150, top see any upside in ES next important resistance will be around 4175-4185, which was held for the last couple of sessions and needs to break. Once broken, next up is 4200 any further upside is limited.
Bearish Scenario
If we OPEN below 4150, the next level down is 4130-4120 was retested and we saw buyers stepping in to buy the dip but if that area is broken 4100 is next.
POC: 4154 | Range: 3723 - 4300
/NQ - Emini Nasdaq 100
Similar to /ES, /NQ was tightly bound around the 13200 to 13350 area which we mentioned in yesterday's plan. A big move is coming in either direction with the tighter and tighter price action across the markets.
Bullish Scenario
Again, if we OPEN above 13200, we might see the test of the 13300-13400 area which has been key resistance for a few sessions but if that is broken then a move up to 13500 is possible.
Bearish Scenario
If we OPEN below 13200, we might see a move to the 13100-13000 area, and if we break further down to the 12750 area is possible.
POC: 13289 | Range: 11390 - 13583
For the stock watchlist from the weekend and daily updates, please watch the below videos…
Earnings Calendar
Economic Calendar
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