Markets take breather on bank holiday.

The markets were quiet as banks took today off in observance of Indigenous People’s Day, leaving retail traders to take majority control of the market. Low volume contributed to the lack of conviction in the price action today.

As the bell rang for the market open, retail traders wasted no time pulling the market lower. It was apparent: bearish sentiment from last week was still dominating retail psychology. 

Both the S&P and Nasdaq quickly started to sell off, heading towards the key level of 3,600 on the S&P 500 futures (/ES). The initial volume was not enough to complete the mission, as the market had temporarily bounced at 3,620, up to resistance at 3,639. After hitting this level and being rejected, the S&P 500 started its descent back to support at 3,600. This level of support held and became the low of the day. 

In the afternoon session, a strong relief rally carried the Nasdaq back up to its June low level. The rally lacked spirit, and the Nasdaq struggled to break through resistance. 

The afternoon session ended without a bang as the markets ended the session range bound. Today’s price action can be described as choppy, volatile, and indecisive, but this should be no surprise. This week’s economic calendar is fraught with key reports that will influence the market’s direction. Volatility is to be expected. 

Economic events to mark on your calendar. 

The first event to mark on the calendar will be the Producer Price Index (PPI) at 8:30 a.m. on Wednesday. PPI is a forward-projecting indicator of what the Consumer Price Index (CPI) may be in the coming months. For example, Kellogg’s may report cereal production inflation before the box ever hits the shelves. Months later, the consumer will feel the trickled-down inflation when the cereal box has a price tag slightly higher. This is just one example of using PPI to forward project CPI. 

Later in the afternoon on Wednesday, the Federal Open Market Committee (FOMC) will release its statements at 2 p.m. Eastern. The anticipation of FOMC often brings added volatility and uncertainty into the market, so be cognitive of the price action leading into the event. The big players on Wall Street will be looking for any indication of inflation and interest rate changes.

Thursday, the volatility party continues as CPI numbers will be released at 8:30 a.m. 

The previous report of CPI came in at 8.3% (year-on-year). The expectation for the data is to come out at 8.1%, a .2% decrease from last month—anything above 8.1% can drop the market dramatically. If the report comes out as expected or better, the market can react positively and rally to the upside. 

The market starts the week off red

At the close, both the Nasdaq and the S&P 500 futures were negative. The S&P 500 futures closed down 0.77%, losing 28 points, while the Nasdaq futures closed down 0.98%, a loss of 109 points.