The Week Ahead
It is again that fun time of the week where I share some thoughts about the past week and for the week ahead.
For the week… SPY 0.00%↑ was -3.2% QQQ 0.00%↑ -3.99%. 10yr was up 15bps to 3.19% 2yr were down making 2s10s +16bps to -0.20%. DXY was up 0.71% on the week whilst EURUSD ended -0.12% and USDJPY +1.9%. Oil futures were down -6.6% for the week, lol. I don’t think there is too much to comment on for the past week apart from the non-existent liquidity.
This week we have the OPEC meeting on Monday and Services PMI on Tuesday. Wednesday, Powell, Master and Brainard will speak.
A few fun facts,
On 08/31 the S&P traded @ 3955 which is 16.6x fwd P/E and 1.7% dividend yield. The 10yr was at 3.2%. The 25 year average fwd P/E is 16.84x whilst -1 std dev is 13.5x - one could state we are entering slightly over sold area based on this valuation measure. By the 25yr avg we are -0.06 std dev under-valued. But compared to the 25yr average of the following measures we are overvalued on a std dev measure.
Shiller’s P/E 29.94x
25yr average 27.99x
0.30 std dev over-valued
Dividend Yield 1.72%
25yr average 1.99%
0.82 std dev over-valued
P/B 3.52x
25yr average 3.1x
0.52 std dev over-valued
P/CF 12.66x
25yr average 11.18x
0.67 std dev over-valued
YTD as of the 08/31, YTD earnings growth were +5.6% whilst multiple growth was -19% and S&P return -13.3%.
Anyway… I believe we began the week at 4060. Last week I gave two scenarios, if 4000 held we’d see we could see an attempt of 4167/ if we traded below 4000 then 3943 would trade, the latter occurred. Despite it being a four day week, expect some volume to return to markets this week. I’ll be looking for spooz to trade @ 4000 in the first two days of the week. It’s quite a difficult week for commentary where it’s shortened. Whilst I expect 4000 to trade I also can see 3880 trading quite easily. We held off 4020 on Friday which was a 200ma on a 6hr chart. Not one for moving averages just something I noticed.
4020 would be the resistance for this week, if 4020 can be broken then I’d expect 4067.
3873 is the support, if broken then can look for 3835.
3967 is my pivot-ish level.
Going into the week ahead, I remain net long. I am slightly long ES futures and my book is still long. I sit on about 40% cash which I won’t be deploying much of until we see 2s10s do what I shared in the post below. If my view on that changes I will share why and when, of course.
I am holding my EURUSD long that I opened on Friday, I’d expect to see the pair to head above parity yet again. I remain short oil futures from quite some time ago.
T-note wise I am long the 10yr @ an avg of 116’05 and short the 2yr 104’08.