Now that retail investors are no longer short on US indices, it could indicate that the sell-off may continue post-FOMC. Additionally, retail is short on USD.

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COT data reveals some confusion in market sentiment. While the S&P saw an increase in long positions, the NASDAQ, RUSSELL, and DOW all experienced selling. This appears to indicate a rotation away from speculative plays. However, if both the DOW and small caps were sold off last week, it could suggest a broader rotation away from the stock market altogether.

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With NFP at the end of the week, there are a few things to consider. Depending on what the Fed says or doesn't say, jobs data could end up being the market mover this week and next. If we get an indication of a cut this year or more of the same sentiment from the Fed, strong NFP data could propel stocks higher. But if Powell indicates less confidence in a rate cut, NFP might not be as impactful since the Fed would not be ready to cut regardless of jobs and inflation data.

NAS100 is stuck between two significant levels of support and resistance. It seems that price is trying to recover from the pullback of around 9% from the highs as we close out the month. However, we may not see a directional move until tomorrow through Friday when we have FOMC Wednesday and NFP on Friday. Depending on what the Fed says this week (talks of rate cuts, or talks of no rate cuts), we could see either a good dip buying opportunity or a continuation lower to complete the move down to the $18,400s. -Frank

Gold is in a similar situation to NAS and the US indices as we approach the Fed conference tomorrow. Being 5% off the highs, the metal could either work its way lower to the bottom of this sideways channel or break back above the top. We would need to hear dovish clues from Powell tomorrow such as talks of a rate cut this year or confidence in inflation coming down.
-Frank

An important pair to watch is UJ which is usually correlated to the short term bond yields US02Y. Unlike gold and indices, a bullish indicator would be of less confidence from the Fed or no talks of rate cuts this year. Price bounced from a strong support level and is looking to work its way back to the highs. There is also a chance that the pair will fail to rally and test the support level again. We can most likely expect volatility without direction until FOMC happens.
-Frank

Job openings data today stayed steady. In recent months we've seen this data trending down closer to pre-pandemic levels, which has bolstered the case for the fed to begin a rate cut cycle.

Current market expectations is 75 basis point worth of cuts by the end of the year.

- Nick

Dow Jones Daily Chart:

Despite todays heavy selling in technology, value stocks (like the ones that make up the dow jones) seem to be holding up very well.

Support at the 40,000 level seems to be holding for US30.

However - Microsoft earnings report in about 2 hours, which will likely cause volatility for all indices as markets weigh how strong forward earnings are expected to be.

- Nick

Only 3 more days left! ⏳

Now that bond prices are bullish, it's clear that investors are eyeing lower interest rates soon. The 10 year note has been steadily bullish for some time. With a slowing labor market and lower projected yields this year, treasuries could be seeing some more upside.

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Yesterday, the NASDAQ posted its record day for the year moving up 4% in one day. Now the tech index is testing resistance around a key resistance level that was one of the levels I marked earlier this week. Although yesterday's move was pivotal, we are now at the decision level.

With strong earnings and dovish comments from the Fed, there may be enough fuel to break above this level which could suggest another test towards the early July highs. As we start a new month today, it's hard to say how much further the market can run from here. I would still air on the side of caution to either side of the trade. There are likely good longs and shorts in this market, depending on the zone and the sentiment. -Frank

Blue chips look stronger than the rest of the indices still. As yields drop, keeping money in assets like bonds is becoming less attractive. Once we see that first rate cut, it could spark more demand in the stocks that will likely perform well and provide a dividend yield on top of that.

We are still 7% off the highs of NAS, 1.3% off the highs from DOW. There is still a long ways to get back to the highs, but a return to these highs is definitely not impossible. The bears may have lost ground and will retreat for now, so the pullback could be the dip buying opportunity that investors wanted.

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SPX500 and RUSSELL are long according to retail. NASDAQ and DOW and Gold are mixed however. Seeing that USOil is the top longed asset suggests that there may be further downside.

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The DOW remains bullish from COT reports while retail is still less optimistic on the value plays. The divergence may suggest that there is more upside for the index.

Looking at our latest fundamental tool, the business forecast shows us a variety of economic and monetary metrics. We're looking at interest rate forecasts for the future which are looking dovish. Starting Q4, it seems that the first rate cut will happen and there will be some relief to the consumer.

1 MORE DAY! ⏳