The NASDAQ opened strong today, with no bearish challenge in sight. The absence of a downside wick indicates consistent buying from the US and Asian markets since the opening bell. I've identified a significant resistance zone where the market might face a test before making its next move.

As we approach this zone, keep an eye out for potential breakouts, but beware of false signals. If the resistance holds and the market reverses, we may see a retest of the lower trend line.

Today's candle mirrors the behavior we observed last Wednesday when the NASDAQ surged 4%. A similar 4% move today would bring us right to that resistance zone.

In summary, stay vigilant for a bear market rally and be prepared to trade both directions. Wait for confirmation of a break above or below the trend line before committing to a longer-term position.

-Frank

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USDJPY has been the bread winner this year until recent. The Bank of Japan surprisingly hiked rates in the last meeting and suggested a flip in monetary policy sentiment for the two currencies. As the US may be seeing an aggressive cut in rates, Japan remains hawkish.

The pair is now a -11 indicating a very bearish reading. If the yen continues to find value over the dollar, bearish sentiment will likely grow in the stock market.

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Jobless claims expectations were 241K and ended up being 233K. This is a beat by 8K claims. Investors may take this as relief, but US unemployment rate is still at 4.3%. The market is buying back very aggressively this morning and this week in general.

However, this doesn't mean that we won't give it all back by the end of the day. A 400-600 point move is not surprising anymore on the NASDAQ now that the VIX is in the $20s. Price could come up to test resistance around the falling trend line before another decision is made.
-Frank

Bonds and stocks have diverged in their price action, with bond prices falling while indices surge today. Rising yields now seem to signal that the economy is stable.

However, I'm not convinced that a small beat in jobless claims is enough to justify a +700 point move in the NASDAQ. Investors anticipate rate cuts either this year or next, and the overall trend of falling yields should increase the value of bonds. Despite this, bond prices have dropped 5% from their highs earlier this week, suggesting we might be in for another wave of volatility.

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Retail traders are only short on the S&P, while they remain long on the NASDAQ, Russell, US Oil, and DAX. Gold has been hovering in a neutral range for some time now.

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Retail sentiment is increasingly bullish on the NASDAQ, while COT data remains choppy. Typically, retail traders look to enter when they anticipate a reversal, but this behavior suggests that a reversal may not be imminent.

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Unemployment claims have been fairly average, with no clear trend emerging. Yet, investors seem to be placing significant focus on this data.

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It's a quiet day in the markets this Friday after an 800 point move on the NASDAQ yesterday. We are wrapping up another earnings week and digesting the latest jobs data from unemployment claims that came in lower than expected. Usually, stocks don't react much to claims data, so this suggests that the market is now highly sensitive to labor numbers.

However, next week is going to be very important with the latest CPI data rolling out on Wednesday. Core and CPI m/m are expected to rise while CPI y/y forecasts to be unchanged at 3%. Investors might not care what these numbers are because they all believe the Fed will still cut regardless by 50 basis points now. This can change leading up to September, but investors want to see the Fed start alleviating borrowing costs to help out the labor market.

Lower inflation data could indicate that the Fed is more comfortable with a September cut which I think could help boost stock market optimism. A higher inflation or stubborn inflation could make investors question if we will even get a cut this soon.

There is a chance that by next Wednesday, we could see the test either up at resistance in the $18,600s range or a drop back below the 200 DMA. Lots of factors leading up to this September meeting, and the clues along the way are going to drive market upside or downside.
- Frank

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Gold, Daily Chart:

Metals may be setting up for a breakout through the highs. Looking for a possible break / retest setup

Possible bullish catalysts:
- The fed cutting interest rates in September is bullish for gold, but if they choose to cut by 0.50% instead of 0.25%, it could lead to a very strong surge in gold prices.
- Economic slowdown in the US has been apparent in recent weeks, pointing to figures like the weak jobs data for July, slowing in manufacturing PMIs, rising unemployment rate, etc. This could continue to weaken the dollar, strengthening gold
- Election uncertainty: odds for the US election have greatly tightened, meaning the market is very unsure of who the next president will be. This uncertainty can cause fear, and may drive gold prices higher in the meantime.
- Geopolitical risks remain high in the middle east between Iran, Israel, Hezbollah, etc

- Nick

The king returns? 👑 Nvidia leading the bounce today, up 4.42%

Gold is currently our top bullish reading on the EdgeFinder, driven by several economic and monetary factors. The metal has become increasingly attractive, especially with a slowing jobs market and persistent inflation. With unemployment at 4.3%, it could take several months of stronger NFP data to bring the rate back below 4%.

If unemployment continues to rise and CPI remains elevated, we could be looking at a very appealing gold market as a hedge against a declining stock market.

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Tech stocks have been relatively unchanged over the past two days, facing resistance on the daily timeframe that requires bullish momentum to overcome the bears. A lower CPI reading could bring some relief to the market, aligning with recent jobs data.

However, if CPI comes in higher than expected, it would indicate a lack of progress toward the 2% inflation target, while job losses continue. This could lead to an emergency rate cut by the Fed to support the labor market, but at the cost of reduced leverage against inflation—a bearish scenario for stocks.