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PMI

Macro Monday 13~Purchase Managers IndexMacro Monday 13 ISM Purchasing Managers Index The ISM Purchasers Managers Index (PMI) measures month over month change in economic activity within the manufacturing sector. The PMI is a survey-based indicator that is compiled and released each month by the Institute for Supply Management (ISM). The survey is sent to senior executives at more than 400 companies in 19 primary industries, which are weighted by their contribution to U.S. Gross Domestic Product (GDP). A PMI above 50 represents an expansion in manufacturing when compared with the previous month. A PMI reading under 50 represents a contraction while a reading at 50 indicates no change. The further away from 50, the greater the level of change. According to Investopedia "ISM data is considered to be a leading indicator of economic trends. Not only does the ISM Manufacturing Index report information on the prior two months, it outlines long-term trends that have been building over time based on prevailing economic conditions". The ISM reports are released on the first business day of each month for the month that has previously closed. Thus, they are some of the earliest indicators of current economic activity that investors and business leaders get regularly. Something to look out for next Monday 2nd October 2023. The PMI focuses mainly on the five major survey areas; 1. Employment (20%) 2. New orders (30%) Covered in Macro Monday 6 3. Production/Output (25%) 4. Inventory levels (10%) 5. Supplier deliveries (15%) We covered the ISM New Orders Index in Macro Monday 6 as it is the largest component of the Purchaser Managers Index making up 30% of the overall index. I will leave a link to the chart. The Chart The chart outlines the last 12 recessions (shaded red zones) with the PMI readings over the same period. As we are already aware above 50 on the PMI reading is expansionary and below 50 is contractionary (red thick line). Three Main Findings 1. In 11 out of 12 recessions a PMI reading at or below 42 was established. This means if the PMI falls to 42 there is a 92% probability of a recession. At present we have not reached that level, we are currently at 47.6. 2. The PMI has bottomed 10 out of 12 times in Quarter 1 (between Jan – March) with the remaining two bottoms happening in Quarter 2 (both in May). This means that 83% of the time the PMI cycle appears to bottom in Quarter 1 with the most bottoms in January (6) with Feb(2) and May(2) in close second place. - It’s worth noting that the bottom of the PMI cycle may not be the bottom of a stock market cycle. If we are forward looking then a rising PMI is positive for the economy and markets but ideally a move above 50 is the true signal of economic expansion from a manufacturing standpoint. 3. The average PMI bottom to bottom cycle timeframe over the past 6 cycles is 58 months with the shortest being 37 months and the longest being 86 months. We are currently at month 38 and the average month of 58 is Jan 2025 with the max of 86 months being May 2027. - How interesting is it that both these potential PMI bottom dates line up with our two most frequent PMI bottom months indicated in point 2 (January and May). - Interestingly according to U.S. government research, since WWII the business cycle in America takes, on average, around 5.5 years which closely aligns with our 58 month (or roughly 5 year) indication for the PMI chart. The business cycle incorporates an aggregate of economic data such as the ISM data, GDP and income/employment metrics. We might cover the business cycle in more detail on a future Macro Monday. The ISM New Orders Index (30% of the PMI) Similar to the ISM New Orders Index Chart (covered in Macro Monday 6) which makes up 30% of the PMI, we have not reached below the 42 level on this chart either which has provided a 100% confirmation of recession when we have had a definitive move below the 42 level historically. For ISM New Orders if we stay below a sub 50 level on the ISM New Orders Chart for greater than 7 months it has resulted in a recession every time except for 1966 and 1995 (8 out of 10 times). We are currently 14 months below the 50 level which is unprecedented, with the new orders index nudging a little lower on the August reading from 47.3 down to 46.8. ISM Data Release 2nd October 2023 When we receive our next ISM Data release next Monday 2nd October 2023 we can refer back to the PMI chart and the New Orders Index Chart and see how things have progressed and if we have reached and critical levels. These charts and the others I have completed on Macro Mondays are all designed so that you can revisit them at any point and press play on TradingView and see if we are breaking new into higher or lower risk territory. I hope they all help towards your investing and trading decisions. Have a great Monday guys, Lets get after it! PUKA
ECONOMICS:USBCOI
by PukaCharts
4
Macro Monday 20 ~ The Philly Fed IndexMacro Monday 20 Philadelphia Fed Manufacturing Index While the Philly Fed Manufacturing Index (PFMI) is a regional report generated from surveys in Philadelphia, New Jersey, and Delaware by the Federal Reserve Bank, it is particularly useful as it provides an advance indication of the Purchasing Managers’ Index (PMI) report which is released up to a week after the PFMI (the PMI surveys the entire US whilst the PFMI only surveys the regions mentioned above). The Philly Fed Index is released this Thursday 16th November 2023 and will provide an advance indication as to what to expect from the PMI released Friday 24th November 2023. Both are a review the prior months survey data, October 2023. The PFMI index dates back to 1968 and is similar to the PMI, the Federal Reserve completes surveys and asks businesses about new orders, shipments, employment, inventories and general business activity, prices paid, prices received, capital expenditures as well as future expectations for business. A reading= 0 is stagnation <0 = contraction >0 = expansion The current reading is -9 so we are contractionary territory. We did fall as low as -31.3 on the April 2023 release. The Chart The main indications from the chart are as follows: The Orange Zone ▫️ When the PFMI remains in the orange zone for >10 months it has always coincided with a Recession - We are in presently in this zone 16 months with 2 brief monthly jumps out of it. I think its safe to say we are 10 months+ in the orange zone which historically has always coincided with a recession. The Red Zone ▫️All Recessions confirmed a reading below -22 on the PFMI (this is below the red line into the red zone on the chart) - In April 2023 we hit a low of -31.3 which is well into the red zone (sub -22). We have since risen above the neutral 0 level to high of +12 in Aug 2023 however we have since fallen back down into the -13.5 (Sept) and -9 (Oct). The Nov Release is due this Thursday 16th Nov (and is actually the reading for Oct - released in Nov) Are we already in a mild Recession? You can see that in March 1970 we reached a similar PFMI level of -31.3, the same level as in April 2023 (there is a dashed red line to illustrate this on the chart). March 1970 was the middle of the 1969-70 Recession which was a mild recession that ran for 11 months from Dec 1969 – Nov 1970. Whilst it was a mild recession as to its impact on the general economy, there was till a 34% decline in the S&P500. The 1969-70 Recession has many similarities to some of our current economic predicaments, with the main factors leading to the 1970 recession being tighter monetary policy, rising oil prices, rising inflation, and slowing growth in Europe and Asia. Sound familiar? From Jan – Apr 2023 the Unemployment Rate was at the lowest levels seen since back in 1969 (at 3.4%). For 8 months (Sept 1968 – May 1969) the unemployment rate was down at 3.4%. We reached this level in January 2023 and oscillated there until April 2023 (only 4 months). Since then the Unemployment rate has risen sharply from 3.5% to 3.9% (July – Oct 2023). Interestingly, this move in the unemployment rate from 3.5% to 3.9% also happened from Dec 1969 to Jan 1970 and marked the start of the recession. Could this be an indicator that we stepped into a recession In July 2023? The orange zone and red zone on the chart are triggering a confirmation nod of a recession. During the recession of 1969-70 the unemployment rate topped at 6.08% in Nov 1970, this is something we have not seen yet however we seem to be trending upwards in that direction. Queue the 8th Dec 2023, the next Bureau of Labor Statistics Unemployment date release. The 1968-70 period was also burdened with high inflation with YOY CPI increasing from 2% - 6% in the 26 month period from Oct 1967 – Dec 1969. Similarly over a 25 month period from May 2020 – June 2022 CPI increased from 0% to 9.08%. The timeline of the 1969-70 inflation is quite similar, not exactly the same rate increase or timeline but similar all the same. Since June 2022 the CPI has come down to 3.7% as of Sept 2023. There are some broader similarities between the late 1960’s and early 1970’s to present day, the Vietnam war was raging and was receiving significant funding from the US government with many bills passed in support of the war effort. There was also significant poverty issues in the states as the war dragged on, and the awareness of money being spent on it was creating social discourse on the topic. Whilst the current situation of funding towards the Ukraine and Palestine conflicts is obviously very different, a similar awareness and disapproval is present as many domestic states are suffering with poverty. US President Johnson summarised the late 60’s quiet well in a 1966 speech stating that the nation could afford to spend heavily on both national security and social welfare — “both guns and butter”, as the old saying goes. Only in today’s circumstances only one of these seem to still be taking priority and it isn’t butter. I believe todays chart and post demonstrates a few things, that there is a high probability that we are already in a recession as of July 2023, however on a positive note the period we find ourselves in has many similarities to 1969-70 period, where the recession was a very bearable and mild one. With some luck, unemployment might top at 6.08% within 9 or 10 months like in 1970 and we will see a correction no greater than -34% on the S&P500 eventually. We already survived a 25% S&P500 decline from Dec 21 – Sept 2022. Minus 34% from our recent $4,580 high would put the S&P500 at approx. $3,000. Obviously there are no guarantees of any of these scenarios playing out, but at present we are certainly playing to the same tune as the 1969-70 period. PUKA
ECONOMICS:USPFMI
by PukaCharts
Ethereum's Market Dynamics PMI Forecast (Short)In the Ethereum community, traders are keeping a close eye on recent crypto market happenings, especially how Ethereum compares to Solana. They're discussing technical stuff like patterns and support levels for ETH/USD. One hot topic is Solana's decentralized exchanges outdoing Ethereum in daily trading volume. People are feeling positive about Solana's success and wondering how it might affect Ethereum's place in decentralized finance (DeFi). Traders are thinking about how this competition could impact Ethereum's market share and user activity, seeing it as a positive sign for Solana's DeFi growth. In this mix, there's a generally positive vibe around Ethereum. Community members are sharing insights on technical analyses, highlighting support and resistance levels, and looking into short-term trading opportunities. But, there's a key event to watch out for: the ISM Service PMI forecast on February 5th at 10 am. The ISM Service PMI, expected to be 52 with a previous reading of 50.6, matters because it tells us about the growth or shrinkage of the services sector. Since Ethereum is influenced by overall market trends, traders and investors will keep a close watch on this economic indicator. It's important to note that if the forecast is too optimistic, it might create uncertainty, leading to a reassessment of market feelings and a possible price change for Ethereum. To sum up, being part of the Ethereum community means navigating through technical details, DeFi competition, and the upcoming ISM Service PMI forecast. While there's generally positive thinking, the high forecast raises a caution flag, hinting that Monday, the 5th, might bring a potential price shift in Ethereum as the market responds to economic indicators and competition dynamics. #Ethereum #TradingView #CryptoAnalysis
EIGHTCAP:ETHUSDShort
by SFXTradez
PMI the last drop into march 2024The chart posted is the PMI and the green up arrows are when the PMI turned up . What also happened was the stock market began rather strong up moves at or within 60 days of the Up turn. The pmi is telling me we have been in a RECESSION and the treasury to mask the recession as been funding the Quarterly with T Bill .I look for the drop in the markets rather soon . And I also look to Yellen to do this with the fed at the same time dropping rates 25 basis by late march of may cycle . This is only being done to make sure they try everything they can do to stop yes I will say it TRUMP. 2025 the beginning of the phase seen 1937 to 1942 I am basis is the chart patterns and data from 1902 and money velocity data since 1913
ECONOMICS:USBCOI
by wavetimer
EUR/USD steady as Spanish CPI lower than expectedThe euro is calm in Friday trade. In the European session, EUR/USD is trading at 1.1053, down 0.08%. Spain released the December inflation report today, with CPI dipping to 3.1% y/y, down from 3.2% in November. This was better than expected as the consensus estimate stood at 3.4%. The reading was the lowest rate since August, with the drop attributed to lower prices for fuel, food and electricity. Monthly, CPI rose from -0.3% to 0.0%, but this was lower than the consensus estimate of 0.3%. Core CPI dropped to 3.8% y/y, down from 4.5% in November. Germany, France and the eurozone will follow with their inflation releases next week. If the data shows that inflation eased in December, it will put pressure on the European Central Bank to cut rates in the first half of 2024. The ECB has not followed the Federal Reserve and continues to push back against rate-cut expectations. The markets have priced in 150 basis points from the ECB next year, with an initial cut expected in April. ECB President Lagarde has poured cold water over rate-cut fever, saying that the ECB should "absolutely not lower its guard". Lagarde may have to shift her hawkish stance or risk tipping the weak eurozone economy into a recession. If next week's inflation report indicates that inflation is falling, we can expect the voices in the ECB calling for looser policy to get louder. The US releases Chicago PMI, an important business barometer, later today. The PMI shocked in November with a reading of 55.8, which marked the first expansion after fourteen straight months of contraction. The upward spike may have been a one-time blip due to the end of the United Auto Workers strike as activity rose in the auto manufacturing industry. The consensus estimate for December stands at 51.0, which would point to weak expansion. EUR/USD continues to put pressure on resistance at 1.1086. Above, there is resistance at 1.1171 1.1116 and 1.1031 are providing support
by OANDA
Macro Monday 22 - ISM Services Vs PMI US ISM Non-Manufacturing Index (ISM Services) Next Release: 5th December 2023 (released on third business day of each month) The U.S. Institute for Supply Management (ISM) Non-Manufacturing Index (“ISM Services”) encompasses a wide range of services across various industries. The index is designed to measure the economic activity and health of the services sector in the United States some of which are professional services (accounting, legal, etc.), healthcare (hospitals, clinics & other practitioners), accommodation, leisure and food services. Similar to the ISM Manufacturing Index (aka as the Purchasers Managers Index) which surveys producers and manufacturers which we covered in Macro Monday 13, the ISM Services index is also based on surveys conducted on participants in the relevant services sectors noted above. Also similar to the ISM Manufacturing index, the ISM Services is reported as a diffusion index, where values above 50 indicate expansion or growth in the sector, while values below 50 suggest contraction. This makes both the ISM Manufacturing Index and ISM Services Index easy to compile onto a chart for comparison purposes. The ISM Services Vs ISM Manufacturing Chart The chart demonstrates the following: ▫️ At present ISM Services has been more resilient and is in expansionary territory at 51.8 (above 50) whilst ISM Manufacturing is in contractionary territory below the 50 level at 46.7. ▫️ Both the ISM Services Index and the ISM Manufacturing Index have been in a downward trajectory since 2021. - You can clearly see that since March 2021 the Manufacturing Index has declined from 64.5 down to 46.7 today (Red Line). - Thereafter from November 2021 the ISM Services Index declined from 67.5 down to 51.8 today (Blue Line). ▫️ As you can see on the chart a steep manufacturing decline can often provide advance an warning of a subsequent services decline (grey areas on chart). It’s important to acknowledge that the Manufacturing Index can lead the ISM Services Index. It is important because we discovered in Macro Monday 13 that the Manufacturing Index (AKA Purchaser Managers Index) reading below 42 can provide an advance/confirmation warning of recession, thus more weight could be assigned to the Manufacturing Index than Services Index in predicting a recession (as it appears to lead services direction). For this reason we will review the ISM Manufacturing Index (PMI) indications below. The ISM Manufacturing Chart The main findings of the ISM Manufacturing Index (AKA Purchaser Managers Index) From a Recession Perspective ▫️ 11 of the 12 recessions on the chart coincided with a PMI of less than 42. ▫️ 1 recession occurred that did not breach below the 42 level (No. 9 on the chart) From a PMI Perspective ▫️ 12 of the 13 times that the PMI moved below the 42 level, this coincided with a recession. ▫️ 1 time we have had a sub 42 PMI reading without a recession (Between 11 & 12 on the chart). At present we are at a level of 46.7 so we do not currently have a trigger event for a recession but we know exactly what to look for. Based on both historical perspectives, there is an c.92% probability of a recession should a sub 42 PMI level be established, or vice versa, in the event of a recession confirmation there is a c. 92% probability it would coincide with the sub 42 PMI level. Timing ISM Manufacturing Bottoms o 10 out of 12 PMI Bottoms occurred in Q1 and the remaining two bottoms were in Q2. 83% of the time the PMI bottoms occur in Q1 which is good to know and watch for with Q1 2024 approaching swiftly. o The average PMI Bottom to bottom timeframe over the past 6 cycles is 58 months (Min 37 – Max 86). We are presently at month 44 and month 58 is Jan 2025 (Q1) The ISM New Orders Index (30% of the PMI) Similar to the ISM New Orders Index Chart (covered in Macro Monday 6) which makes up 30% of the Purchaser Managers Index or Manufacturers Index (PMI), we have not reached below the 42 level on this chart either which has provided a 100% confirmation of recession when we have had a definitive move below the 42 level historically. At present we are at 45.5 on this chart and we seem to have a downward trajectory at present unless something changes upon the next data release. In summary, we now know now that the Manufacturers Index (PMI) often leads the Services Index, and we need to pay close attention to the 42 level on both the New orders Index (Makes up 30% of PMI) and the Manufacturing Index (PMI) as a breach below this level on these charts increases the probability of a recession upwards of 92%. We are also now aware that there is a high incidence of the PMI bottoming in Q1 (83% of the time) and occasionally in Q2. These are quarters we can be on high alert for a sub 42 level. The ISM Services PMI is released on the third business day of each month at 10:00 a.m. (EST) or 15:00 GMT. The next release will be on the Tuesday the 5th December 2023. Most of the ISM data releases commence within the first 5 working days of the month. As always folks, I will watch the numbers and keep you informed. All of the above charts are updated on TradingView as data is released. PUKA
ECONOMICS:USNMPMI
by PukaCharts
US Dollar Steadies as Market Awaits Economic Data, Yen SoftensIn early European trading, the US dollar steadied near a one-week high against a basket of currencies, holding at 103.559 on the Dollar Index. This stability follows a period of weakness in November, marked by traders anticipating significant rate cuts by the Federal Reserve in the coming year. However, recent actions have seen a shift in sentiment as investors scaled back on dovish expectations, waiting for crucial economic indicators this week, including job openings, ISM services activity data, and the highly anticipated nonfarm payrolls report on Friday. Amid this anticipation, the Japanese yen experienced a slight dip against the dollar, trading at 147.08, influenced by concerns over inflation. Tokyo's Core CPI for November showed a decrease to 2.3%, down from October's 2.7% and below the expected 2.4%. The Bank of Japan remains cautious about tightening its monetary policy despite persistent inflation above the 2% target, citing the need for sustained wage growth for long-term inflation sustainability. The BoJ's upcoming meeting in mid-December will be closely watched for any potential policy shifts. As for the US, focus is on the imminent release of the ISM Services PMI, being for November hovering around 52.7 after October's decline to 51.8. Meanwhile, technical analysis for USD/JPY indicates resistance levels at 148.77 and 147.72, with support at 146.48 and 145.96 Risk Disclosure: Trading Foreign Exchange (Forex) and Contracts of Difference (CFD's) carries a high level of risk. By registering and signing up, any client affirms their understanding of their own personal accountability for all transactions performed within their account and recognizes the risks associated with trading on such markets and on such sites. Furthermore, one understands that the company carries zero influence over transactions, markets, and trading signals, therefore, cannot be held liable nor guarantee any profits or losses.
Short
by legacyFXofficial
11/19/23 DXY Weekly Outlook#DXY #WeeklyOutlook Next week is Thanksgiving holiday so, historically that week can be a hit or miss and especially given the fact that we don't have a lot of news this week so I would tread lightly. We don't have any red folder news until Wednesday and that is going to be an early release of #UnemploymentClaims , #DurableGoods, and #ConsumerSentiment. On Tuesday we do have #ExistingHomeSales which will ll be something that's an economic gauge more so than something we may want to trade off of, but we can see what happens on Tuesday. After Wednesday, there's not really much going into Thursday and Friday because Thursday is a holiday, although we do close out the week with #PMI. Probability for dollar this week looks like we will definitely take out the PWL last week that I was sitting at 103.815. We are sitting inside a D+FVG but we have the yearly opening price #YOP just about 0.31% below us and that may be what we’re drawn to at least to tap it. We could see some LTF moves to the up side but the daily and weekly charts are pretty heavily favored to the downside meaning that: XXX/USD bullish USD/XXX bearish D chart
TVC:DXYShort
by Cory4rex
11/19/23 US30 Weekly Outlook#US30 #WeeklyOutlook Next week is Thanksgiving holiday so, historically that week can be a hit or miss and especially given the fact that we don't have a lot of news this week so I would tread lightly. We don't have any red folder news until Wednesday and that is going to be an early release of #UnemploymentClaims , #DurableGoods, and #ConsumerSentiment. On Tuesday we do have #ExistingHomeSales which will ll be something that's an economic gauge more so than something we may want to trade off of, but we can see what happens on Tuesday. After Wednesday, there's not really much going into Thursday and Friday because Thursday is a holiday, although we do close out the week with #PMI. We set the PWL inside of a D+OB and never came back near it. We expanded and created +FVGs on the Daily, 4H, and 1H that held price near the WHs once the #cpi news release on last Tuesday. If we stay in inverse correlation to the dollar I would assume the PWHs are still our targets on the HTF. We set an equal high EQHs with the PWH from 8/28/23. Nothing is really standing in the way of of us pushing higher into them and if we see any LTF moves to the downside I’d take them with the logic that we are trading into bullish points of interest POIs . We are inside of a W-OB (not drawn) and D-OB but the is holding and setting up to push higher. #BullishCase: We see price stalling and react to a LTF POI and bounce to take the PWHs out. I would look for any recent bullish order blocks or fair value gaps and look for price to react there. We have EQHs that is my main target for us on US30 #BearishCase: We are pushing up hard over the past 3 weeks and all the down moves, even the ones that seem to be setting us up for lower price have been bought back up. LTF moves at fresh bearish POIs from the 4H or 1H are the only sell setups I’ll probably look for and doing so with the #BullishCase in mind. We closed out Friday to the downside and we have two PDLs, SSL, and into the FVGs, and these would be my short terms downside targets. 1H chart 4h chart D chart:
FOREXCOM:US30Long
by Cory4rex
Gold: Shining Bright with OpportunitiesGold is once again in the spotlight, and here’s why! Economic Cycles, PMI & Gold The US Purchasing Managers Index (PMI) is a leading indicator often used to identify turns in the economic cycle. A below 50 PMI print indicates contraction in the US manufacturing cycle, while a print above 50 suggests expansion. Generally speaking, expanding manufacturing cycles spell a boost for industrial materials, like copper, while contractionary periods spell downturns in the economy and a preference for 'flight to safety', boosting gold holdings. An interesting observation from the chart above is the correlation between the Gold/Copper ratio and the inverted US PMI, moving in tandem over the last decade. However, looking at the current scenario, the PMI has turned lower, yet the Gold/Copper ratio has remained relatively muted, suggesting that gold may currently be underpriced. Similarly, the Gold/Silver ratio shows a less pronounced but similar effect. Significant drops in the PMI below the 50 level have historically triggered notable increases in the Gold/Copper ratio. With the PMI currently below 50 for a sustained period, this might be priming the ratio for a potential upward surge. Yields, Fed Expectation & Gold As a non-interest-bearing asset, gold loses its appeal when interest rates rise, leading investors to prefer interest-yielding products. We covered the effect of a Fed rate cut on gold in a previous article here . While the Fed remains steadfast in holding rates, even the act of pausing rate hikes positively impacts gold. This effect is observed via the Gold/US10Y Yields ratio. The previous pause in rate hikes preceded a significant run-up in this ratio. Additionally, this ratio is currently near its resistance level, which it has respected multiple times over the last decade. With the Fed expected to continue holding rates, now could be an opportune time to consider adding gold to your portfolio. Gold Price Action Gold’s current price action also shows a completed cup-and-handle pattern. With an initial attempt to break higher halted, it now trades right above the handle. Additionally, gold could arguably be trading in an ascending triangle pattern, as noted by its price action as well as generally declining volume, potentially signaling a bullish continuation pattern. In summary, given the Fed's stance on holding rates, the correlation between PMI and the Gold/Copper ratio, and the bullish technical indicators in gold's price action, a positive outlook on gold seems reasonable. To express our view, we can buy the CME Gold Futures at the current level of 1962. Using the cup and handle pattern to guide the take profit level, at 2400 and stop at 1890. Each 0.10 point move in gold futures is for 10 USD. The same view can also be expressed with greater precision using the CME Micro Gold contract where the notional is one-tenth of the regular size gold contract. Here, each 0.10 point move is for 1 USD. The charts above were generated using CME’s Real-Time data available on TradingView. Inspirante Trading Solutions is subscribed to both TradingView Premium and CME Real-time Market Data which allows us to identify trading set-ups in real-time and express our market opinions. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com Disclaimer: The contents in this Idea are intended for information purpose only and do not constitute investment recommendation or advice. Nor are they used to promote any specific products or services. They serve as an integral part of a case study to demonstrate fundamental concepts in risk management under given market scenarios. A full version of the disclaimer is available in our profile description. Reference: www.cmegroup.com www.cmegroup.com www.cmegroup.com
Editors' picks
COMEX:GC1!Long
by inspirante
9
Macro Monday 19~Nonfarm Payrolls Macro Monday 19 Total Non-Farm Payrolls: Pre-Recession Observations What is Non-Farm Payroll? The nonfarm payroll measures the number of workers in the U.S. includes 80% of US workers. The figures exclude farm workers (Nonfarm) and workers in several other job classifications such as military and non-profit employees. Data on nonfarm payrolls is collected by the Bureau of Labor Statistics (BLS) and it is included in the monthly Employment Situation report (the “Employment Report”) which includes two surveys, the Household Survey, and the Establishment Survey. Nonfarm Payroll is included in the latter the Establishment Survey. The Establishment Survey gathers data from approximately 122,000 nonfarm businesses and government agencies for some 666,000 work sites and about one-third of all payroll workers. Anyone on the payroll of a surveyed business during that reference week, including part-time workers and those on paid leave, is included in the count used to produce an estimate of total U.S. nonfarm payrolls The Full Employment Report is released by the BLS on the first Friday of each month at 8:30 AM ET and reflects the previous month's data. The Chart ▫️ The Chart highlights the last four recessions (red shaded areas) ▫️ The aim of the chart is to identify what Non-Farm Payroll movement occurred prior to each recession (in the blue shaded areas) so that we create a gauge that identifies the early warning signals of such recessions. ▫️ From reviewing the data (illustrated in the data chart), prior to each recession there was a either a confirmed decline in Non-Farm Payrolls prior to recession or an increase of less than 0.0300 mln in Non-Farm Payrolls prior to recession (a tapering off or sideways move). This was evident prior to all four recessions reviewed. Main Findings: 1. The four most recent recessions all seen a decline in Non-Farm Payrolls prior to recession or an increase of less than 0.030 mln in Non-Farm Payrolls prior to recession (the “Signal”). Advance notice of recession was 1 to 12 months depending on recession (final column) 2. Currently we do not have a decline or an increase of less than 0.030 mln in Non-Farm Payrolls thus suggesting we do not have an advance recession warning triggering at present. 3. From a review of the data chart we are now aware that a pre-recession signal can trigger and provide us with 1 months advance notice or 12 months advance notice. In the event the parameters of number 1 above are met to provide a Signal, we can then add this chart/metric as a recession warning chart. Breakdown of Each Recession Signal (signal defined in 1 above): ▫️ The 1990 recession gave us a 1 month advance warning of recession. ▫️ The 2000 recession provided 2 advance warnings (2 & 3 in the chart), one signal gave us a 9 month heads up and the other a 3 month advance notice. ▫️ Similarly, the GFC 2007 recession provided 2 advance warnings (4 & 5 in the chart), one gave us 5 month advance warning, and the second was the signal the recession had started. ▫️ COVID-19 provided a 12 month advance warning with a decline registered from Jan – Feb in 2019. Side Note: Interestingly this has some alignment with last week’s chart on Durable goods. In Feb 2019 one year before the COVID-19 Crash the Durable Goods Moving Average provided an advanced sell/recession signal, and whilst the S&P500 did rally c.13.5% after the signal over the subsequent 12 months, the S&P500 ultimately fell 23% thereafter in a matter of months taking back all those gains and more. Durable Goods is also included in the Establishment Survey so maybe it should come as no surprise that we have synchronicity between both charts on the COVID Crash. The Durable goods chart is also not presently signaling a recession similar to this Nonfarm payroll chart. Both charts appear to demonstrate some resiliency in the employment market (echoing Jerome Powell's sentiment that Employment is tight). False Signals ▫️ Unfortunately there are a number of false signals throughout the chart whereby a decline in payrolls or an increase of less than 0.0300 mln is observed with no follow up recession however most of these false signals are either 1 month in duration or happened in the direct follow up years after the recession slump (when a recession is no longer of concern). Regardless, for this reason the Non-Farm Payrolls Recession Signal cannot be utilized as a standalone indicator, we need other charts and data to help identify the risk of recession. ▫️ Other data should be utilized in conjunction with Non-Farm Payrolls such as the following closely aligned charts all of which are show concerning pre-recession patterns in one way or another; 1. Total Non-Farm Layoffs and Discharges 2. Total Nonfarm Job Openings 3. US Continuing Jobless Claims 1. Total Non-Farm Layoffs and Discharges is signaling a similar trend to the 2007 Great Financial Crisis were there was an initial increase of c.450k (up to the first peak) and eventually a total increase of c.885k from lows to peak recession high. - At present we are trending upwards and had an initial peak of c.507k (it could be the only peak or the initial peak, time will tell). 2. Total Nonfarm Job Openings is signaling a significant decline in job openings much larger than the prior two instances where job opening declines led to recession. - A quick glance at the chart and you can see that we have exceeded the typically level required for recession and exceeded the typical timeframe (using GFC and COVID as reference points). 3. US Continuing Jobless Claims -Prior to the last 8 recessions the average increase in cont. claims was a 424k increase over an average timeframe of 11 months. - Since Sept 2022 Cont. Claims have increased from c.1.3m to 1.818m (an increase of c.518k over a 13.5 month period). We are above both pre-recession averages number of increase and time. In summary: ▫️ Last week’s Durable Goods Chart and this week’s Nonfarm payrolls chart are not triggering a recession warning at present. Both charts appear to emphasize a resilient labor market. ▫️ In stark contrast all three of the additional charts I provided above are incredibly concerning on the recession probability front. In particular Cont. claims , the most concerning of the bunch, is surpassing all pre-recession averages, highlighting that people are finding it harder to recover from a job loss and find a new job. This chart alone would suggest that the labor market is beginning to significantly soften. ▫️ Over the past week we have also had an update to the Purchaser Managers Index which declined further into contractionary territory from 49.0 to 46.7 (est. 49.0). Another signal towards a softening labor market. ▫️ It would be remiss of me not mention that I have seen a Month Over Month (MoM) Chart of the Nonfarm payrolls doing the rounds and it appears to illustrate a softening and slowing of labor conditions (will share in the comments). Such a trend could translate to a gradual tapering and/or decline on our monthly Nonfarm chart over time. When you consider all of the above, you would have to expect a market decline is around the corner but also expect some continued lag before we see it due to those few charts that are not even showing the pre-recession signals, never mind an actual recession signal. The charts holding out are Durable Goods, Nonfarm Payrolls and ill throw in Major Market Index TVC:XMI as a complimentary chart that has not lost its support as of yet. We are also aware that the Dow Theory has confirmed a bear market and has been expecting a market rally before bear trend continuation (the sell into rally). All the same these moving parts can change and pivot so we have to keep an open mind but its hard not to lean very cautiously as it stands. We can keep an eye on these final charts that remain defiant as they may be the final strongholds and provide us with the final warnings in the event of.... As always folks stay nimble out there PUKA
FRED:PAYEMS
by PukaCharts
Macro Monday 18~Durable Goods SignalsMacro Monday 18 Using New Orders for Durable Goods to Anticipate Market Direction This week we are using the Manufacturers New Orders for Durable Goods Survey data (“Durable Goods”) to help anticipate price movements on the S&P500. The 30 month moving average for Durable Goods can act as a threshold level for buy and sell signals for the S&P500 whilst also providing advance warnings of recession and/or capitulation events. This has been clearly illustrated in the chart. Durable Goods Explained Durable goods orders is a broad-based monthly survey conducted by the U.S. Census Bureau that measures current industrial activity which proves to be is useful as an economic indicator for investors. Durable goods orders reflect new orders placed with domestic manufacturers for delivery of long-lasting manufactured goods (durable goods) in the near term or future. A high durable goods number indicates an economy on the upswing while a low number indicates a downward trajectory. Durable goods orders tell investors what to expect from the manufacturing sector, a major component of the economy, and provide more insight into the supply chain than most indicators. This can be especially useful in helping investors understand the earnings in industries such as machinery, technology manufacturing, and transportation. What’s Included in Durable Goods? Durable goods are expensive items that last three years or more. As a result, companies purchase them infrequently. Examples include machinery and equipment, such as computer equipment, industrial machinery, and raw steel, as well as more expensive items, such as steam shovels, tanks, and airplanes—commercial planes make up a significant component of durable goods for the U.S. economy. Many analysts will look at durable goods orders, excluding the defense and transportation sectors as large once off orders can often skew the figures. Durable goods orders data can often be volatile and revisions are not uncommon, so investors and analysts typically use several months of averages instead of relying too heavily on the data of a single month. In our chart we have found the 30 month moving average to be particularly apt as a threshold level The Chart In the chart we have the Durable Orders metric in blue and the S&P500 in baby blue. The 30 month moving average on Durable Goods (Dark Brown Line) is used as a threshold level for buy and sell signals. When the blue line for new orders of Durable Goods definitively passes the 30 month moving average (Dark Brown Line) this provides the buy or sell signal based on whether it moves above or below the average. Main Findings 1. When Durable Goods Orders(blue) fall below the 30 month moving average(brown) this is sell signal 2. When Durable Goods Orders(blue) break above the 30 month moving average(brown) this is a buy signal 3. Declining durable goods and/or a fall below the 30 month moving average has offered advanced warning of recession and/or capitulation. Sell Signal Record (Blue line crossing below Dark Brown Line) ▫️ In Oct 2000 five months before the Dot.Com Crash which commenced in Mar 2001, the Durable Goods Moving Average provided a sell signal offering an five month advanced warning of recession. ▫️ In Dec 2007 the Great Financial Crisis (“GFC”) commenced and whilst New Orders for Durable Goods had not passed below the moving average before the recession it did pass the moving average mid recession signalling an advance warning of the major capitulation event of the GFC crash. Once again Durable Goods was of great utility in avoiding unnecessary losses. ▫️ A sell signal triggered in Oct 2014 and whilst there was no crash, the S&P500 price oscillated sideways for >24 months post signal and only increased in value by 9%. During this 24 month period capital would have been better allocated somewhere offering a better than 9% return. ▫️ In Feb 2019 one year before the COVID-19 Crash the Durable Goods Moving Average provided an advanced sell/recession signal, and whilst the S&P500 did rally c.13.5% after the signal over the subsequent 12 months, the S&P500 ultimately fell 23% thereafter in a matter of months taking back all those gains and more. Buy Signal Record (Blue line crossing above Dark Brown Line) ▫️ As you can see from the chart the buy signals provide a great confirmation of trend, that price on the S&P500 will likely continue in an upwards trajectory. ▫️ For the four buy signals confirmed we had 50 months of upwards price pressure on the S&P500 on the first two occasions and on the latter two 18 months and 15 months of upwards price action. ▫️ Taking the four aforementioned buy signals, an the average return was 60.5% f(max return possible from a buy signal the market high). ▫️ The performance from a buy signal to sell signal was an average of 43% across the four instances. The chart demonstrates that using the 30 month moving average for Durable Goods New Orders can very useful in determining market trend. At present we are well above the 30 month moving average and appear to be trending upwards. We can continue to monitor this chart and watch for a cross of the 30 month moving average as an additional confirmation of a change to a bearish trend for the S&P500 when it happens. For now this is just another chart to help us identify bearish/bullish trend changes by using the economic data from Manufacturers New Orders for Durable Goods. As always folks, stay nimble PUKA
FRED:DGORDER
by PukaCharts
NQ Power Range Report with FIB Ext - 10/24/2023 SessionCME_MINI:NQZ2023 - PR High: 14752.00 - PR Low: 14737.00 - NZ Spread: 33.5 Key Economic Event 09:45 – S&P Global Services PMI Maintaining long-term inventory above 14600 Evening Stats (As of 12:25 AM) - Weekend Gap: +0.21% (filled) - Session Gap 8/2: -0.33% (open > 15807) - Session Gap 7/20: -0.11% (open > 15939) - Session Open ATR: 254.80 - Volume: 26K - Open Int: 260K - Trend Grade: Neutral - From ATH: -11.9% (Rounded) Key Levels (Rounded - Think of these as ranges) - Long: 15247 - Mid: 14675 - Short: 14103 Keep in mind this is not speculation or a prediction. Only a report of the Power Range with Fib extensions for target hunting. Do your DD! You determine your risk tolerance. You are fully capable of making your own decisions.
CME_MINI:NQZ2023Long
by mv3trader5
$GOLD PRICE ACTION : (READ THE CAPTION) The four-hour gold chart shows an uptrend. The price is above the Ichimoku cloud, which is a confirmation of bullish momentum. Therefore, the market is expected to reach the first resistance. Key levels The first resistance is at $1984.32, which corresponds to the 127.20% Fibonacci level. The second resistance is formed at $2006.86. Intermediate support is located at 1971.03 and can lead to a bullish return of the market. The first support level is at 1949.45, which indicates a strong support zone.
OANDA:XAUUSDShort
by ScalpRoomGold
EUR/USD higher after mixed European releasesThe euro has stabilized on Wednesday and is in positive territory. In the North American session, EUR/USD is trading at 1.0519, up 0.50%. Germany is the largest economy in the eurozone. Once a global powerhouse, the economy has weakened and finds itself in the unfamiliar position of being a laggard in the bloc. Recent economic releases haven't been encouraging, but there was some good news from the services sector today. The Final Services PMI rose to 50.3 in September, up from 47.3 in August and above the preliminary estimate of 49.8. Still, the outlook for services activity remains soft as demand has been weak and service providers remain pessimistic. The Eurozone Services PMI remained in contraction territory with a reading of 48.7 in September. This marked a small rise from 47.9 in August and was higher than the consensus estimate of 48.4. Eurozone retail sales declined 1.2% m/m in August, compared to a revised 0.1% m/m decline in July and below the consensus estimate of -0.3% m/m. The decline was broadly based and will likely weigh on third-quarter GDP. On an annualized basis, retail sales fell by 2.1%, following a 1.0% decline in July. This marked an eleventh straight monthly decline. European consumers are grappling with 6% inflation and real wage growth was negative in the second quarter. Against this backdrop, it's no wonder that consumers are cutting back on consumption. ECB President Christine Lagarde signalled that the central bank is likely done with its rate-tightening cycle. Lagarde said in a speech today that interest rates were at a sufficiently restrictive level to bring inflation back down to the ECB's 2% target. The ECB raised rates at last month's meeting but hinted strongly that interest rates have peaked. The central bank is counting on elevated rates to continue filtering through the economy and cooling down growth and inflation. The ECB has raised rates ten straight times in the current tightening cycle, but the last decision was a dovish hike and a pause at the October 26th meeting would not be a surprise. EUR/USD is testing resistance at 1.0489. Above, there is resistance at 1.0572 There is support at 1.0404 and 1.0321
by fisherkj4
✏️ $GOLD : Another Fall ? (READ THE CAPTION)As you can see, the price fell to $1914 and after that it was able to grow up to $1928! The range of $1924 to $1929 is one of the supply ranges, and if the price stabilizes below this level in the 4-hour time frame, we will probably see a further drop in the price! Note that we still have a liquidity void in the range of $1931 to $1945, which we expect to be filled in the short term! Among the attractive and important supply zones, we can mention $1941 to $1947! Don't Forghet To Push The Boost (Like) Button and Follow Me for more ! Best Regards , Arman Shaban
OANDA:XAUUSDShort
by ArmanShabanTrading
83
NQ Power Range Report with FIB Ext - 9/22/2023 SessionCME_MINI:NQZ2023 - PR High: 14871.25 - PR Low: 14850.00 - NZ Spread: 47.75 Significant Economic event: 09:45 – S&P Global Services PMI Continuing inventory decline - Near 14800 pivot from 8/25 Evening Stats (As of 1:15 AM) - Weekend Gap: N/A - Session Gap: -0.33% (open > 15807) - Session Gap: -0.11% (open > 15939) - Session Open ATR: 235.77 - Volume: 32K - Open Int: 236K - Trend Grade: Neutral - From ATH: -11.2% (Rounded) Key Levels (Rounded - Think of these as ranges) - Long: 16105 - Mid: 15247 - Short: 14675 Keep in mind this is not speculation or a prediction. Only a report of the Power Range with Fib extensions for target hunting. Do your DD! You determine your risk tolerance. You are fully capable of making your own decisions.
CME_MINI:NQZ2023Long
by mv3trader5
FOMC Order And PredictionTargeting sells from 1944-46 area. Golds sudden bullish movement to this price has caught my eye. I believe FOMC will not raise rates, thus I think it will have a huge impact on metals. There could be range up to that 1948, my stop is at 1948.5 with 2 targets 1940 and 1927 which was around the area of 25 key support. Ive implemented the use of FVG, BOS and CHoCH, Im slightly adjusting the way I trade news, and trying to play it safer with setting orders rather than instant executions. Overall this trade gives me a 1:1, 1:3.75 R/R. Orders set, lets see how my analysis goes.
OANDA:XAUUSDShort
by xEthan
DXY Is About To Revert - Peak Strength Index - 63 DXY Possible? The DXY has been in a position like this 3 times in history 1985 | 2001 | 2023 Every time the DXY has had a TSI 4W cross while the Stoch RSI was in the afterburn stage of rising with the Japanese Currency (JPY) either breaking major support or major resistance it has led to a complete rubber band reversal of the DXY. We now have the USDJPY hanging onto to support from 1990s. DXY losing momentum, PMI index reverting. DXY in Burn Zone. TSI showing strength loss. Annual inflation rate in the US 3% Does not matter if you think the SPY is overvalued, the FRED is done raising rates Inflation has collapsed (for now) meaning their next option is to hold / drop rates + initiate stimulus. This will cause a panic reaction and rush back into all assets away from bonds and money market funds. Recession will be avoided for 2024 and many will blame the FRED for "printing money" but the reality is this is going to cause every market to overheat and burn up depending on how fast the DXY reverts. This is where you get the flash backs of 1920s leverage something worse will develop over the next years and create a larger problem. Get the popcorn ready.
TVC:DXYShort
by FederalXBT