Weeks Review into W/C 27th June 2022

Manufacturing PMIs UK and US GDP data to reveal economic trends

The start of the new month brings fresh global manufacturing data in the form of the PMIs. The surveys will provide an important update onOvernight Session More broader factory sector performance in June after the flash PMIs painted a downbeat picture for the major developed economies.

The preliminary June PMI data showed factory orders falling for the first time in two years in the US with renewed declines also seen in the UK and Japan. The eurozone – closest to the war in Ukraine – saw orders fall for a second successive month. The deteriorating manufacturing demand picture, alongside a worsening trend in services growth, led to an immediate recalibration of market pricing for interest rate paths in the US and Europe and also saw commodity prices come under pressure.

Source IHS Markit /S&P GLOBAL

KEY TAKEAWAYS

• Further updates to the housing market are expected with the release of May pending home sales, along with the latest update to the S&P Case-Shiller Home Price Index, tracking price increases in April.
• The May update to the Personal Consumption Expenditures (PCE) price index will be released Thursday, likely showing an acceleration in PCE prices to a new 40-year high in May.
• The final estimate for first-quarter U.S. GDP growth will be released Wednesday; the reading is expected to be unchanged from the prior estimate of a 1.5% contraction.
• Purchasing Managers’ Index (PMI) survey updates are expected later in the week, providing data onOvernight Session More the strength of the manufacturing sector and goods-producing industries.
• Updates to eurozone unemployment and inflation are expected onOvernight Session More Thursday and Friday, respectively.

Weekly Review

Using the composite
In addition to monitoring the previous day's Market prof... More profiles gives me a lot of clarity in understanding the market. Understanding the story and the basic mechanics of what is going onOvernight Session More simplifies almost every other aspect of my trading, especially timing.

By identifying areas of balance/ acceptance in the auction I have a natural edge. I can identify value and the pivots of change. In balance I look to fade the extremes, when activity leaves an area of acceptance, I monitor for strength and conviction of the move. For this, I use volume and value as a guide. As a general rule, if a move is genuine, volume and value will move in away from prior acceptance to a new area.

Looking at the composites above, I try to narrate a story where the auction had been driven down into a key event (OPEXOptions typically have monthly expirations, but CME has rece... More). When participants were done hedging their bets for lower prices. The auction again regained its composure and reversed. Value and volume are now moving off the lows created into OPEXOptions typically have monthly expirations, but CME has rece... More.

The Breakout rallies last week emanate from multiday balance areas which create a ‘pressure cooker effect’. The longer and more volume is conducted in balance the bigger the blowout potentially. Here is a tweet that may help explain large violent moves in assets.

Volcanoes and Trading! Think of areas of balance as a volcano. Using a composite
In addition to monitoring the previous day's Market prof... More profile helps us identify bigger volcanoes. Break-out rules apply when we identify expulsion and mean reversion strategies whilst dormant. Please RT and share #marketprofile #trading #BREAKOUTSTOCKS pic.twitter.com/HXq5p8k0C2

— The Balanced Trader (@Trading_Balance) June 26, 2022

Monthly Profiles into Month End

A look at the monthly profiles into Month-end:

Normally I look for a move back towards Monthly Value given a large move away. This month end will be of even greater importance as its a quarterly end. I have built a quarterly profile and looking for directional bias back toward the quarterly POCThe POC or Point-of-control is the price where the most amou... More 4116. The close onOvernight Session More Friday was bank onOvernight Session More the HVNHigh volume node, or peak. An area that has been well traded... More 4020 from the quarterly profile.

A large part of the rebalancing seems to have been accomplished into quarter end. I am going to be very careful this week. The strong breakout rally onOvernight Session More Friday will be my ST reference onOvernight Session More Monday given the lack of clarity in the middle of the monthly profile
In addition to monitoring the previous day's Market prof... More. I will update Fridays debrief into the Monday open. HTF references and will be my immediate focus using the monthly and 3month profile.

Monthly Multi Distribution, Settled Just above Monthly Mid

H 4173 L 3639 VPOCThe POC or Point-of-control is the price where the most amou... More 3768 & 4116 MID 3906 | 3 MONTH VPOCThe POC or Point-of-control is the price where the most amou... More 4116

All images can be found on my Twitter feed in high resolution. Please let me know if you have issues much appreciated.

UPDATE: