Lots of data coming, questions over unemployment and services

アップデート済

This week, a barrage of U.S. data releases will help to shape investor sentiment. ISM Manufacturing PMI, ISM Manufacturing Employment, and S&P Global Manufacturing PMI are on today's schedule. Factory orders, FOMC minutes, and API crude oil stock change will follow on Wednesday. Then, on Thursday, imports, exports, ADP employment change, initial jobless claims, S&P Global Composite PMI, S&P Global Services PMI, ISM Services Employment, ISM Services PMI, and JOLTs job openings will be in focus. Finally, on Friday, average hourly earnings, non-farm payrolls, unemployment rate, and participation rate will be revealed (remember, we named only the most important data releases and not all that are scheduled for this week).

As the unemployment rate rose from 3.4% in April 2023 to 3.7% in May 2023, we are interested to see whether there was further growth in the metric. If yes, that will be a negative sign for the U.S. economy. The same will apply if there is any weakness in the services sector, which has been (so far) holding fairly strong compared to manufacturing. However, if the data will come in as expected (or better), it will likely provide more lift for the market. We will update our thoughts after today’s release.

Illustration 1.01

Illustration 1.01 displays the daily chart of SPX, two simple moving averages, and horizontal support/resistance levels. If SPX manages to hold above Resistance 1, it will be bullish. But if it fails, it will raise our concern about the rally’s breakdown.

Illustration 1.02

The picture above shows the unemployment rate in the United States since September 1998.

Technical analysis gauge
Daily time frame = Bullish
Weekly time frame = Bullish
*The gauge does not necessarily indicate where the market will head. Instead, it reflects the constellation of RSI, MACD, Stochastic, DM+-, ADX, and moving averages.

Please feel free to express your ideas and thoughts in the comment section.

DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not be a basis for taking any trade action by an individual investor. Therefore, your own due diligence is highly advised before entering a trade.

ノート

In June 2023, the U.S. S&P Global Manufacturing PMI reached a six-month low of 46.3, indicating a continued decline in the manufacturing sector's health (in fact, the print came in lower for two consecutive months). This decline was primarily driven by a decrease in output and a significant downturn in new orders, resulting from weakened demand caused by inflationary pressure and higher interest rates. ISM Manufacturing PMI also dropped for a second consecutive month, falling from 46.9 in May 2023 to 46 in June 2023. Both of these indicators show signs of continued contraction. As a result, today, we will watch out for the data releases related to services. If services also show signs of contraction, the odds of recession will grow.