Weekly Market Playbook
What Traders Need to Know Right Now
The Market Week in Review
Last week was a tug-of-war between optimism on cooling inflation and renewed concern from hot producer prices. U.S. equities finished mixed: the S&P 500 slipped ~0.3% Friday, the Dow edged higher, and the Nasdaq gave back groundafter an earlier run. Underneath the surface, small caps outperformed, showing improved breadth that had been missing most of the summer.
For traders, the message was clear: momentum in the megacaps is pausing, and capital is rotating into cyclicals, financials, and industrials. That rotation is worth watching because when breadth improves, rallies can sustain longer. But the jury’s still out with Jackson Hole and FOMC minutes on deck.
Macro Pulse: Inflation Still Center Stage
Two inflation prints drove markets:
Consumer Price Index (CPI): Headline slowed to 2.7% y/y and core dipped to 3.1% y/y, with a tame 0.2% monthly rise. Traders read this as a green light for the “September cut” narrative.
Producer Price Index (PPI): Surprised sharply higher at +0.9% m/m—the biggest jump since 2022—showing pressure bubbling upstream.
Translation: CPI calmed nerves, but PPI reminded us inflation is not dead. If producer costs bleed into consumer prices, the Fed’s path to rate cuts isn’t as smooth as markets hope.
Add in a softer University of Michigan sentiment print (58.6 vs 61.7 prior) and solid July retail sales (+0.5%), and you have a consumer that’s still spending but turning more cautious. That matters because consumer resilience has been the backbone of this market.
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Rates, Dollar, and Volatility
The 10-year yield closed near 4.3%, still a line in the sand for traders. Each tick higher puts pressure on growth stocks, especially tech. If yields pop above 4.35%, expect Nasdaq weakness; if they slip back under 4.25%, growth gets room to breathe.
The Dollar Index (DXY) held around 98—firm enough to weigh on commodities and crypto. Meanwhile, the VIX stayed calm near 15, a reminder that complacency is alive, but with event risk this week, vol sellers could get caught leaning.
Commodities: Oil and Gold in the Spotlight
Crude oil (WTI) hovered in the low $60s, over 20% off June highs. For traders, this is a range-trade market: fade extremes around $63–64 with tight risk. A reclaim above $65 could trigger a momentum squeeze.
Gold stuck near $3,335/oz. It’s coiled and ready to break. A dovish Fed minutes or Powell hinting at cuts could launch it toward $3,400. Hawkish signals could dump it toward $3,280–3,300. Either way, this is a setup for big two-way trades.
Crypto Corner: Macro Beta Is Back
Bitcoin cooled back to $117k after tagging new highs, while Ethereum traded near $4.4k. Importantly, crypto ETFs saw record flows—over $40B combined volume last week. That institutional money is sticky, but near-term price action is tied tightly to macro.
When yields rise and the dollar firms, crypto stalls. A dovish Powell or weaker economic data could spark another leg higher. For active traders, watch BTC $119–120k as resistance and $113–116k as support.
The Week Ahead: Five Events That Matter Most
This week is loaded. Here are the five catalysts that can move markets:
1. FOMC Minutes (Wednesday)
The July meeting saw two members dissent in favor of cutting. The minutes will show how divided the Fed really is. Look for:
How many leaned toward pre-emptive cuts.
Concerns about services inflation.
Discussion of tariffs.
Trading play: expect volatility in bonds, dollar, and Nasdaq futures on release. If minutes read dovish, go long ES/NQ; hawkish, fade tech strength.
Jackson Hole Symposium (Thursday–Saturday)
The big one. Powell speaks Friday on “Labor Markets in Transition.” Markets will parse every word for clues on September. Expect him to balance:
Acknowledging cooler CPI.
Warning about hot PPI.
Keeping “data dependence” alive.
Trading play: reduce risk before Powell speaks. His tone will set direction for equities, gold, and crypto into next week.
Retail Earnings Blitz
Heavy hitters report:
Home Depot (Tue)
Lowe’s, Target (Wed)
Walmart (Thu)
Expect commentary on tariffs, consumer health, and margins. If Walmart and Target show resilience, retail could lift broader sentiment. If guidance weakens, watch XRT (retail ETF) for downside.
High-Frequency Data (Thursday)
We get jobless claims, PMIs, Philly Fed, existing home sales—all in one day. A weak read sparks growth scare trades: buy bonds, fade cyclicals. Strong services PMI and steady claims keep the soft-landing narrative intact.
Market Microstructure
Breadth improved last week, but watch if it holds. If small caps roll over while yields rise, Nasdaq could regain leadership by default. Keep an eye on:
RTY/NDX ratio
Equal-weight vs cap-weight S&P
VIX term structure
These are tells for whether this rally has legs.
Actionable Trading Map
Here’s how I’m positioning and what I’m watching:
Equities
Running 50–60% exposure vs. normal.
Long selective cyclicals and small caps, but keeping tight stops on semis/AI stocks.
Hedge with VIX calls expiring next week.
S&P levels: 6,400–6,420 support, 6,470–6,500 pivot, 6,540–6,560 resistance.
Nasdaq 100: 23,300 support, 23,800–24,000 supply zone.
Trading bias: Buy ES dips if Fed minutes dovish; short QQQ pops if Powell leans hawkish.
Bonds & FX
10-year yield: Below 4.25% bullish for risk assets; above 4.35% bearish.
Trading long ZN futures as hedge into minutes. Will flip short if Powell hawkish.
DXY: 97.7–98.3 pivot. Above = long USD/JPY; below = scalp EUR/USD bounces.
Commodities
Oil: Fade $63–64 intraday; close above $65 opens $67.
Gold: Range is $3,280–3,400. I’ll trade the Powell break, not pre-position.
Crypto
BTC: Support $113–116k; resistance $119–120k. Above $120k with dovish Fed = breakout trade.
ETH: Benefiting from ETF flows. Prefer ETH/BTC pair trades on dips.
Key Levels Recap
S&P 500: 6,400–6,420 (demand), 6,470–6,500 (pivot), 6,540–6,560 (supply)
Nasdaq 100: 23,300 (support), 24,000 (resistance)
10-year yield: 4.25% (bullish risk), 4.35–4.40% (risk-off trigger)
DXY: 97.7–98.3 pivot
WTI: $63–64 range; $65 breakout
Gold: $3,280–3,300 support; $3,400 resistance
BTC: $113–116k support; $120k breakout line
Trading Approach for This Week
This is a calendar-driven week. Here’s my playbook:
Early week (Mon–Tue): Look for rotational trades. Small caps, financials, and cyclicals can work while tech digests.
Wednesday (FOMC minutes): De-risk ahead of release. Use options to play short-term moves.
Friday (Powell at Jackson Hole): This is the big pivot. His tone will determine whether September’s cut is “locked” or “still conditional.”
If dovish: Long growth, gold, and crypto.
If hawkish: Long dollar, banks, and value; fade tech.
Bottom Line
We’re at a crossroads. Markets want to rally on soft CPI, but hot PPI and tariffs complicate the story. This week is about risk management—not swinging for home runs. The setups are there, but event risk means sizing matters more than conviction.
The best traders will:
Get paid early in the week.
Scale down into Wednesday.
Let Powell decide the tape on Friday.
This is a week where discipline beats aggression. Trade the reaction, not the prediction.
DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.