All eyes are on Friday’s upcomming Non-Farm Payroll Report with SPX starting the week near all-time highs.
After the typical mid-summer corrective phase, SPX approaches the start of September and return of vacationing market participants hovering near all-time highs. All eyes are on Friday's Non-Farm Payroll report with the reaction to this report to determine the durability of the current rally.
Until then, caution is warranted as the lack of volume fails to validate the current rally. Greater volume is anticipated following the release of a cluster of economic reports and the September expiration of equity index futures contracts later this month. In other words, volatility is very likely to increase in September which is equally likely to weigh on prices. To be clear, this is not a recommendation to fight the current ascending trend but it is a good place to protect any gains as prices are at all-time highs. If prices retain lower support levels after an inevitable throwback test, it provides better entry points for a potential ascent to the SPX 2025-2050 zone.
As SPX may very well extend higher with the closest SPX confluent resistance layers between 2025-2050, marginal gains will become more difficult if SPX attains another year of double digit gains (above the 2034 threshold). Anything beyond 10% this year would qualify as an outlier (or "Black Swan" territory) increasing the odds of a deeper future corrective mean reversion. This is more of a concern for institutional and passive investors. Active investors/traders can profit from future elevated volatility. Watch this space, as suggestions how to adjust to increased financial market uncertainties will be offered.