Week in Review: 2-9 September 2024

Financial Markets

For the week, the main stock market indices were down, with the S&P500 dropping 4.3% and the NASDAQ 100 5.9% in the red. The small cap index (Russel 2000) fell 5.7%.

Gold is still hovering close to all-time-highs, but lost 0.2% - even if it falls to 2400$, it could still be part of a bullish consolidation. Silver fell 3.3% and is around the 25$/oz level. Silver should remain in the 23-28$ range in the near future.

The barrel of WTI fell an amazing 7.5% and reached support at 68$. We expect a small bounce/recovery this week.

Bitcoin fell 4.3% and continues on a downward trend with the next target around 53000$.

The relative strength of the US dollar (DXY) was nearly unchanged and around 101. The EUR/USD rised slightly to 1.108$, while the USD/JPY is down to 142 JPY.

US M2 money supply has not been updated this week.

The national financial conditions index (NFCI) for the week of 26th August 2024 loosened by 1.1% and still doesn't seem to translate particular signs of financial stress in the markets (this data is delayed by 1 week!).

US bond yields now sit at 3.696% for the 2-year and 3.746% for the 10-year. The yield curve is now uninverted and with its normal up-rising slope.

The VIX rised to 22 and shows some market fear. Investors are seeking puts for protection in the next 30 days.

Comment Section

As we predicted last week, "if nobody else is buying, then the stock market moves in the near term are likely going to be sideways and slightly down (unless positive news start popping out of somewhere)".

The tech stocks suffered badly, as did small caps is general. Another fall of 3-8% in the next weeks wouldn't be surprising, and would constitute a normal correction.

The big question is about the next FED meeting in a couple of weeks - what is the market reaction going to be? Are we going to rip higher for some time after the first FED rate cut, and then start a heavier round of selling? Maybe...

Volatility has arrived, and put premiums are going higher. Keep some cash aside for opportunities and don't be overly aggressive for now (it's too soon to go heavy on the trigger).

Take care, and good luck.

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