SGT Chart Book

Market Observations, SGT Chart Book|14 Aug 2023

Debate continues on some key topics keeping some good volatility in these summer markets. Is the summer rally running out of steam?

The SP500 falls for a second week amid conflicting inflation data.

Inflation:

PPI (Producer Price index), released on Friday showed prices ticked up from June numbers and prompted some concern from market participants after a largely encouraging July CPI (Consumer Price Index) released the day before. The Fed will watch the data closely, with the next Fed meeting scheduled for September.

Recession:

Market commentators discuss the type of landing the US economy will see, with A.I. adding to the confusion. One characteristic in the news is the shape of the yield curve.

Right now, yields on longer-term U.S. Treasuries remain far below those of shorter-term bonds; an anomaly known as an inverted yield curve that has earned fame as a harbinger of downturns.

Whenever the spread turns negative for at least two months, a recession has followed within the next year-and-a-half. Only the unusual pandemic recession wasn’t preceded by an inversion of that length.

Hourly US30 (Dow)

As we can see from this hourly chart from last week, while volatile sessions were seen, the actual movement was very sideways.

Looking left at previous tops can provide us with some level of support around the horizontal line and behind that the up sloping trendline containing the previous pull back lows.

10-Year Yields

With the talk of an unprecedented series of rate hikes, we can see this clearly on the monthly chart below.

The daily chart shows a well-developed up channel to give some support and resistance levels within this very choppy market.

DAX 40

The German stock market made new highs after the 2022 rally and as we can see have a good support line giving the bull encouragement.

USDJPY

Market retests previous highs: a breach of this may get the dollar bulls excited, but beware BOJ.

US OIL

The chart illustrated the sideways market that we have witnessed this year in crude oil. From a chart perspective, we see top of range, bearish divergences, might be worth a sell.

BTC

Sideways for another week, upsloping trend line containing previous pull backs should be watched.

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.