[2024.09.02 Monday Analysis + Opportunity Insight]

Hello traders,


Key Observations on Commodity Trading in the First Week of September

★★★★★ With the arrival of September, the commodities market is ushering in a critical period full of challenges and opportunities.

★★★★★ This week, as an important observation window ahead of the Federal Reserve's September interest rate meeting, there will be a number of key data releases that could have a significant impact on the market.

1. Intensive release of U.S. economic data

Monday of this week is a US holiday, and from Tuesday, a number of key economic indicators will be released, including:
- Tuesday: ISM Manufacturing Purchasing Managers' Index (PMI) for August
- Wednesday: July JOLTs job openings data
- Thursday: August ADP nonfarm payrolls data and initial claims for unemployment benefits
- Friday: the August employment report (the most important data of the month and week)

These data will provide the market with important clues to the health of the U.S. economy.

2. Precious metals market movements

Gold:
- Managed funds increased their net long position for the fourth consecutive week to the highest level since March 20 years.
- I personally expect the price of gold to fluctuate between $2,438-$2,526 per ounce this week.

3. cryptocurrency market

★★★ Bitcoin continued to fall over the weekend, dropping to the $58,000 range, suggesting that market liquidity may be tightening again.
★★★★ This trend is worth watching closely as it may reflect broader market liquidity conditions.

4. U.S. Stock Valuation Risks

The market appears to be struggling to maintain its upward trajectory despite the S&P 500's historically high valuations (price-to-sales ratio of 2x historical median, inflation-adjusted P/E ratio 10% higher than 1929). Worth noting:
★★★ The VIX (Panic Index) is tightly controlled and has remained relatively stable even as oil prices have swung sharply.
★★★ U.S. stocks have stayed up despite the rise in the U.S. Dollar Index and 10-year U.S. bond yields, a relatively rare occurrence.

★★★ Let's explain this phenomenon in a more layman's terms. ★★★

Imagine the U.S. economy as one big amusement park:

A. The dollar index is like the price of an admission ticket to an amusement park.
- When the price of an admission ticket goes up, it usually means that the amusement park is becoming more expensive and potentially less attractive.
- For international investors, a more expensive dollar means that it costs more to invest in the United States market.

B. The 10-year U.S. bond yield is like the safest carousel in the park.
- When ticket prices (yields) on the carousel go up, it usually attracts more people to ride the safe ride.
- This means that people may pull money out of other more exciting items (like stocks).

C. U.S. stocks are like the most exciting roller coaster in the park.
- Typically, when the safe item is more attractive, people will be less interested in the exciting item.

Normally, when the admission ticket becomes more expensive (dollar appreciation) and the safe item is more attractive (bond yields rise), the exciting item (stocks) should become less popular and prices may fall.

But now, we see a strange phenomenon:
Even though the entry ticket has become more expensive and the safety item has become more attractive, people are still flocking to want to ride that thrill rollercoaster (buy stocks).

This is rare because it defies common sense. Possible reasons include:

1. investors may believe that the U.S. economy is particularly strong and worth the risk.
2. there may have been a large amount of money that had to go into the stock market, such as regular investments by pensions or institutional investors.
3. Investors may have lost confidence in other investment options and feel that the stock market is "the only option.
4. There may be human factors supporting the stock market, such as the influence of large organizations or policies.
★ ★ ★ ★ ★ ★ I personally think the human factor is bigger.


5. Technology stocks risk tips

NVIDIA stock may be at risk. Options market data shows:
- U.S. stocks saw heavy put options trading at the open on Friday.
- Retail investors appear to be exiting long positions.
- This situation could lead to a sharp correction in NVIDIA stock. A big drop in the stock price would see stock market liquidity pull out of the market.

[Gold

See Figure 1, last Thursday, the circle has been prompted by the short-term risk of gold topping, last Friday's U.S. time period to this Monday's Asian plate gold trend, should confirm this view, just this top consolidation time than we expected more than a day, and the target FIBO 382 position 2475 near the range has not been touched.

Short needs new single injection to go farther, considering Monday is the U.S. market closed, new short single entry time can be considered in today's Monday before the end of the European close, or Tuesday's Asian open end of the shock after the time period. Friday's empty single continue to hold and do a good job of stop-loss protection can be.