Stock Market Analysis

Monday, August 28, 2017

US Market Outlook - Week 5 Aug

Welcome to the final week of August 2017! Time really flies this year! And yes, my birthday promotion is still on! Check out my training course for a huge 50% discount at quickly! Just hit the link.

This is not only the final week of August but also the start of September as well as Friday would be 1 September. The first week of each month is usually full of anticipation in the market as the market receives the two most important economic data of each month, data which the Feds look at when deciding on their monetary policy changes. These are, the ISM index released on the first day of each month and the jobs report released on the first Friday of each month. Both data can and have significantly moved the market whenever there was a surprise and are therefore extremely important economic data to watch out for.

Here is where this gets very interesting this month. This month, BOTH ISM index AND Jobs report will be released on the SAME DAY! This is a very rare occurrence as the first day of the month needs to be a Friday in order for both reports to coincide like that. This usually happens only once or twice a year and for this year, it happens this Friday as well as on 1 December 2017.

The last 5 times both reports coincided with each other were on July 2016, April, 2016, January 2016, May 2015 and August 2014.

Now, what typically happens in the market when these two heavyweights release on the same day? Lets take a look at the S&P500, which is the broadest measure of the 3 main market indices.

1 July 2016 was a small candlestick day of just +0.19% and average volume.

1 April 2016 was a significant positive day of +0.63% and average volume.

1 January 2016 was a bad bearish day of - 1.53% and strong volume as the market enters an intermediate correction.

1 May 2015 was a bullish day of + 1.09% and average volume.

1 August 2014 was a bearish day of -0.29% and strong volume.

From the above and as well as going back some more, we can see that even though both extremely powerful reports are stacked on each other, they rarely do anything significant to the market both in terms of movement and volume.

Coming back to the present, the market continues to struggle in a sideways bearish inclined fashion following last Wednesday's rally exactly as predicted. No surprise there. This intermediate correction is really shaping up to look almost exactly the same as the March intermediate correction! Yes, this is possible not because prices move in a predictable fashion but that collective human behavior tends to follow patterns that repeats itself. This is the whole basis of technical analysis. If human behavior is a random walk, there will be no basis for technical analysis at all. All technical analysis relies on the fact that human behavior repeats itself in discernible patterns that can be visually represented using various mathematical means.

As such, I won't be surprised to see the market continue bearish and sideways this week.

For now, the market turns a short term neutral trend within an intermediate neutral and primary bull trend.


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