SGT Chart Book

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Last Week’s Recap

Friday saw the release of jobs data in the US, the latest sign of accelerating economic momentum. Employers added 336,000 jobs in September, the strongest gain since January and up sharply from the prior month’s upwardly revised 227,000 gains.

Immediately after the economic release, bond and stock prices fell sharply, reflecting how economic strength reduces the likelihood that the economy is close to a recession that would trigger Fed rate cuts. Both markets later recovered, however.

The reversal during the trading session put the spotlight on a much-debated question on Wall Street: Whether good economic news is good or bad for stocks. On one hand, a resilient job market and strong consumer spending could boost corporate profits. But rising yields on expectations that the Fed may hold rates higher for longer are likely to reverberate throughout the economy, including in the form of higher borrowing costs that have weighed on stock prices.

S&P 500

The S&P 500 jumped 1.2% on the day, posting a 0.5% weekly gain, and snapping a four-week losing streak. The broad-based index is down 6% from its recent July high, and its gain for the year is now down to 12%.

The chart shows intra-day price movement from last week:

Dow Jones

Last week initially saw lower prices with the market within striking distance of the trend line support off Covid lows before Friday’s rally.

US 10-Year Rates

The yield on the 10-year U.S. Treasury note settled Friday at 4.78%, compared with nearly 4.88% just after the jobs report was released.  The news initially rattled markets, briefly sending bond yields to their highest level in 16 years.

US Dollar Index (DXY)

After a week of gains the index sold off, initial targets for pullback are in the 105.80 area. Have we put in a more meaningful top or is this just a pullback after recent strength?

EURUSD

New year lows were seen earlier in the week before the reversal. Of note is bullish divergencies on RSI, as with DXY, the trendline is seen as area of interest.

USDJPY

Significant area of interest, with the 150 level considered the line in the sand for the Bank of Japan.

Silver

Follow-through selling was seen after the breach of trendline support mentioned last week.

Gold

Gold extended its losses to get within $10 of our $1800 target.

US Oil

As we noted last week, there was a crowded trade looking for lower prices with the first target at 84.50 which was easily reached and exceeded. Over the past week, crude has reversed its course, with prices dropping by more than 11%.

WSJ Comments

One reason was “buying exhaustion,” said Daniel Ghali, analyst at TD Securities. Businesses anticipated the tight market and bought ahead of the run-up, Ghali said. Bullish positioning by hedge funds and other speculators was the highest it had been in more than three years, according to Standard Chartered Bank. That left the market with more traders poised to sell than to buy.

BTCUSD

Testing the top end of the recent trading range. For now, the major support levels are holding.

Until next week, happy trading.
SGT Trade Desk

Disclaimer: Trading Desk Observations are not trade recommendations. The purpose of these charts is to bring to your attention potential chart patterns you may wish to monitor.

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