Updates for Tuesday 9/7/21

We trade 3x ETFs such as TQQQ TNA SOXL LABU UVXY using proprietary analysis of volatility. 

Updates 1:00 AM - Tuesday 9/7/21

This coming week
The economic calendar this week is light, but there are a few reports that may move the market a bit.

Wednesday:   JOLTS report (job openings and offers rates on hiring and quits)
Thursday:  Jobless Claims
Friday:  PPI (Producer Price Index)

This is still a bull market that's climbing a wall of worry.   So let's look at the current worries and their implications.

Wall of worry:   slowing growth
WSJ Saturday headlines read "Delta Variant Throttles Job Growth".   That pretty much summarizes the current economic situation.   

There are traders arguing that COVID cases have peaked for this year, that bad news is good news, and that the stock market is going to melt up for the rest of this year.

However, with a large population of students going back to school full time unvaccinated, and the cold weather arriving to send more people indoor, and the natural disasters putting large groups of people into enclosed and unsanitary conditions, it's unrealistic to expect COVID cases to drop from current level.  If anything, they are more likely to rise.

According to WSJ, hiring in August was weak in service sectors, while retailers cut jobs.  The economy is losing some steam.   Consumers are more cautious about spending.   And business is willing to pull back on hiring.

The silver lining in slowing job growth is that there is now less of a case for the Fed to immediately launch into tapering.   So the easy money may still stay in the system longer.
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​Wall of worry:   inflation
The PPI report this coming Friday is important.   Producer prices have exceeded high estimates in each of the last five reports.

• July: 1% increase overall inflation; 1% increase ex-food and ex-energy 
• August:  0.6% overall;  0.5% ex-food and ex-energy (projected)
• Annual:  8.3% overall;  6.6% ex-food and ex-energy (projected)

These numbers are certainly concerning, but the Fed is still messaging that inflation is temporary.   And interestingly enough, the chart of TIP (Treasury Inflation Protected bond ETF) has formed a double top and appears ready to drop.   This means the bond market isn't too concerned about spiraling inflation.

Fireworks likely next week
As we said above, this is still a bull market climbing a wall of worry, and participants are still buying the dip.   However, as we also mentioned before, there are events coming up next week that are likely to cause some sharp moves in price.

9/15:   $VIX expiration
9/17:   Quadruple witching 
9/22:   FOMC announcement

We will discuss price levels for $SPX $NDX IWM further below. 

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