July 8, 2024
(INFLATION DATA WILL GUIDE MARKET ACTION THIS WEEK)
July 8, 2024
Hello everyone,
Week ahead calendar
Monday, July 8
3:00 p.m. Consumer Credit (May)
8:30 p.m. Australia Consumer Confidence change
Previous: 1.7%
Tuesday, July 9
6:00 a.m. NFIB Small Business Index (June)
9:30 p.m. China Inflation Rate
Previous: 0.3%
Forecast: 0.4%
Wednesday, July 10
10:00 a.m. Wholesale Inventories final (May)
10:00 a.m. US Fed Powell Speech
Thursday, July 11
8:30 a.m. Consumer Price Index (June)
Previous: 3.3%
Forecast: 3.1%
8:30 a.m. Initial Claims (07/06)
2:00 p.m. Treasury Budget (June)
Earnings: Delta Airlines, PepsiCo, Conagra.
Friday, July 12
8:30 a.m. Producer Price Index (June)
10 a.m. Michigan Sentiment preliminary (July)
Earnings: Citigroup, Wells Fargo, JPMorgan Chase, Fastenal, Bank of New York Mellon
This week we see US data releases, such as CPI inflation, alongside a speech from Fed Chair Powell. Following last week’s June employment report – which revealed the highest unemployment rate since 2021 – the US dollar weakened against several major currencies. Will this weakness continue?
If the CPI and PPI due out Thursday and Friday, respectively, continue to show easing pricing pressures, this cooling trend may be the data the central bank locks in to start to ease up on monetary policy.
And that would certainly be a bullish development for investors who are on edge about the stock market rally and its ability to power on. A CPI under 3% would be a real risk-on moment for the markets.
Noise abounds on the airwaves at the present time. With the S&P500 at all-time highs, many are questioning how long the run can last and are constantly speculating on the timing of a giant retracement. Should we take profits? Should we diversify into other sectors? Will the mega-caps stand their ground and steadily move ahead?
What you do going forward all depends on your philosophy towards trading and investing. If you are long-term focused, hold. If you are short to medium-term focused, you can pyramid out of some of your holdings. In other words, take some profits off the top, but let the remaining stock run. By doing so you have your seed capital returned. You can also purchase protection (insurance) against a large downside move by buying puts, although here you must consider the value of the option is quickly wiped away as time marches on.
I trade alongside investing for the long term, so I am always pocketing income, while my portfolio continues to grow. Expect pullbacks in the market. It’s part of being an investor in the market.
PSYCHOLOGY CORNER
How to avoid emotional trading
Understand your emotions and control them.
To achieve this, a trader must:
1/ Have a solid trading plan
Every trader should have a clearly defined plan – which system you will use – fundamental analysis, technical analysis, or a mixture of both, its advantages and disadvantages, how you will identify trades, and how you will manage them.
Keep a trading journal on your desk, where you can write down your observations, identify your weaknesses, and build on your strengths which can help you avoid common trading mistakes and put you on the path to becoming a profitable trader. Constantly shifting from strategy to strategy will not do any good and will eventually lead to emotional trading taking over.
2/ Understand your risk appetite
When you are first starting out, it is wise to be conservative in your trading. Of course, every trader is different, so you need to identify your risk tolerance or risk appetite and plan accordingly.
3/ Know when to take a break
You should not trade if you are feeling stressed and exhausted. If you have had a string of consecutive losing trades, stop and take a break until you have reviewed and understood what happened.
External factors can also have a negative impact on your mental state. When these events occur, it is sometimes better to take a break and work through the situation before you return to your trading.
QI CORNER
Green roofs at car parks in Japan provide crucial habitats for bees and other pollinators, essential for biodiversity…
MARKET UPDATE
S&P500 – there is still no sign of upside exhaustion yet. Support lies around the 5,400’s. From an Elliott Wave perspective, the S&P500 is still interpreted as progressing within a bullish 5th wave. Target is around the 5,700’s.
Gold- uptrend in progress. Further upside is anticipated. Support lies at around $2,350. Upside targets include $2,530.00. Be conscious of the possibility of a pullback to the $2,270-250 level before gold commits to a firm rally ahead.
Bitcoin- we have seen weakness in Bitcoin which was not unexpected on the back of Mt. Gox beginning to pay creditors. Mt. Gox went into bankruptcy after a hack that saw members’ Bitcoin stolen. Support lies around $50,000. Expect some messy price action before a well-defined bullish move.
Cheers,
Jacquie