Price action
Despite NVDA earnings and PCE, QQQ logged a quiet week, settling down at the 475/50dma support zone. Although intraday price action remains choppy, daily realised volatility has fallen considerably from the August high. The 14 day ATR % has dropped from 3% to 1.6%, a level consistent with the current bull market.
The Fed
The Fed was quiet this week. Next week we have a sequence of data releases, which will provide further colour about the state of the US labour market. This starts with the employment subcomponent of the ISM-M on Tuesday, continues with JOLTS on Wednesday, then ISM-NM and IJC on Thursday, then culminates with NFPs on Friday. Weak labour data may raise expectations that the Fed will cut by 50bps at their September meeting.
Sentiment
Sentiment is bullish, but not excessively so yet.
AAII: Bulls at 51%
NAAIM: up to 81, still some way short of the 100 area consistent with max short term euphoria.
Breadth
Continues to improve.
T2108, aka % stocks above 40dma: rising
McClellan Summation Index: rising
Seasonality
Seasonality suggests September and October of election years can be tricky.
Summary
Price action: QQQ continues to consolidate at its 50dma. Intraday price action is choppy, but daily realised volatility has fallen. The longer term primary trend remains bullish.
The Fed: labour market data next week may determine whether the Fed cuts 25bps or 50bps at its September meeting.
Breadth: improving
Sentiment: bullish, but not yet at an extreme level that is contrarian bearish
Seasonality: entering a challenging period
Key events next week: a string of labour market data culminating in NFPs on Fri 6 Sep.
PS, an explainer for the weekly slide can be found here:
https://chartnotes.substack.com/about
PPS, if you find these posts useful, please do post and share - thank you.