Trading Insights: Choppy trading ahead, a leading indicator used for 70 years turns up

The above chart illustrates the Chicago Business Barometer ™ indexed to 100 vs the S&P500 index.

The CBB is a monthly report that includes fresh information on U.S. economic activity. The CBB tends to lead changes in the general direction of the US stock market.

The CBB moved up 1.3 points to 42.8 in July, however, readings below 50 are considered to indicate slowing economic activity.

The above chart illustrates the CBB oscillating above and below its 50 point trigger level.

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Market Talk:

Today’s economic calendar

Alert! US Job Openings (JOLTs) due at 2 PM UTC

• Job openings due today, not the nonfarm payrolls (NFP) which are due this Friday, Us Job Openings indicate all open job positions that are available on the last business day of the month (July 2023 for today’s JOLTs)
• The JOLTs report is used by traders and investors to get a jump on what the NFP report could look like
• The JOLTs report tends to trigger an increase in market volatility when released
• Assets in focus; US100, S&P500, Dowjones30, USD FX pairs
• Lower JOLTs indicate prospects of a slowing US jobs market and vice versa

Source: TradingView / J. Knobel August 1 2023 6:52 AM UTC

Watch out for choppy trading conditions in the short term

A choppy market can best be explained as a market with no clear trend

• Normal markets tend to trend up or down
• A choppy market tends to trade sideways with no clear trend

When a market enters a trading range eg. no clear trend, it reflects investors' and traders' mood of becoming undecided.

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US100 - no clear trend on the 4 hour short term chart

The above chart illustrates US100 price action on the 4 hour chart

Trading ranges tend to require a “catalyst” to move price out of the range.

Some traders may employ a trading range breakout strategy during periods of sideways market action.

US100 - clear uptrend on the longer term weekly chart

The above chart illustrates US100 price action on the weekly chart

Technical commentary:

US100 CFD current price $15,753. Despite that the weekly chart indicates a longer term (100 days plus) uptrend, the shorter term (14-25 day) 4 hour chart suggests a trading range. Upside prospects above the $15,932 (52 week high) could place the $16,950s in sight, however, downside risk below $14,788 support (see 4 hour chart) could trigger the end of the multi-month uptrend.

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