Weekly Trader's Outlook

If you read last week's blog, you might recall that Nate had a "Slightly Bullish" outlook for the market this week, with a secondary forecast for "Higher Volatility" given the potential macro and geopolitical catalysts on the calendar. Overall, that forecast proved reasonably accurate. Stocks largely extended their advance and continued to grind higher, although trading was not without periods of volatility. Treasury yields remained elevated, particularly on the long end of the curve, and investors continued to monitor developments in the Middle East. Despite these concerns, equity markets demonstrated resilience as strong technical trends, supportive sentiment, and continued risk appetite helped offset the headwinds. Volatility remained relatively subdued, with the VIX falling to an eight-month low during the week, suggesting investors have grown increasingly comfortable with both the macro backdrop and geopolitical risks. Looking back, the market largely followed the "melt-up" script Nate highlighted last week, with stocks continuing to push higher despite several reasons for caution.

At the time of this writing (12:40 PM ET)

I will provide an overall “modestly cautious” forecast for stocks next week, since the end of summer tends to be seasonally week time for markets, on top of continued uncertainty amid the Iran conflict, all while bond yields appear to be resuming their selloff. What could challenge my forecast? While there are certainty risks, many of these risks have been in place all year, and amid a strong backdrop of earnings growth across the entire US stock market, strong economic data, it wouldn’t surprise me if the market continued to look through the risks.

• Monday 8/24: Chicago Fed National Activity Index
• Tuesday 8/25: ADP Weekly Employment Change, Philadelphia Fed Non-Manufacturing Activity, Richmond Fed Manufacturing Index, New Home Sales, and Consumer Confidence
• Wednesday 8/26: MBA Mortgage Applications, Personal Income & Spending, PCE and Core PCE, Durable Goods, 2Q26 GDP (second reading), Personal Consumption, Capital Goods Orders
• Thursday 8/27:.Trade Balance, Retail Inventories, Initial Jobless Claims, Kansas City Fed Manufacturing Activity
• Friday 8/28: Chicago PMI, University of Michigan Consumer Sentiment, Preliminary Benchmark Payrolls Revision

• Monday (8/24): None
• Tuesday (8/25): Dicks Sporting Goods (DKS), Zoom Communications (ZM), Intuit (INTU)
• Wednesday (8/26): NVIDIA (NVDA), Okta (OKTA), Crowdstrike Holdings (CRWD), Synopsys (SNPS), Veeva Systems (VEEV), Salesforce (CRM), HP Inc (HP), Standard Nuclear (STDN)
• Thursday (8/27): Dollar General (DG), Dollar Tree (DLTR), AutoDesk (ADSK), Workday (WDAY), Marvell Technology (MRVL), Affirm Holdings (AFRM)
• Friday (8/28): Hyperliquid Strategies Inc (PURR), Hub Group (HUBG)

There was a mixed bag of economic data this week, headlined by a hawkish tilt in the July FOMC minutes, which showed a 9-3 vote to hold rates steady with "many" officials flagging that a hike could still be needed if inflation doesn't ease. The labor market continued to hold up, with initial jobless claims coming in slightly better than expected at 206K. The bigger surprise came from manufacturing, as the Philadelphia Fed's index blew past expectations to hit its highest level since April 2021, a reading corroborated by strong S&P Global PMI data showing services activity expanding at its fastest pace since 2022. Here's a breakdown of the reports:

• FOMC Minutes (Wednesday, July 28-29 meeting): Revealed a 9-3 vote to hold rates at 3.50%-3.75%, with "many" participants indicating a rate hike might still be necessary if inflation fails to ease.
• Initial Jobless Claims (Thursday): Came in at 206K, slightly below the 210K consensus and down from the prior week's 212K, reinforcing that the labor market remains resilient for now.
• Philadelphia Fed Manufacturing Index (Thursday, August reading): Surged to 47.4 from 41.4 in July — the highest level since April 2021 — crushing expectations of a decline to roughly 25. Nearly 57% of firms reported increased activity vs. only 10% reporting declines.
• S&P Global US PMIs: Both the Manufacturing and Services PMI came registered in expansion again this month, with services activity expanding at the fastest pace since 2022.

Longer-term U.S. Treasury yields pushed higher this week, which resulted in some steepening of the curve, before finding some support as the Treasury announced buybacks of longer-dated maturities. Collin Martin, Head of Fixed Income Research and Strategy at the Schwab Center for Financial Research, is skeptical that the buyback program will provide lasting relief. His core view is that buybacks won't solve the deep-rooted issues — including U.S. government debt — that are pushing yields higher. He argues that over the longer term, the Fed and Treasury will need to address their policy challenges head-on, or risk losing credibility.

Market expectations around a potential rate hike from the Federal Reserve imply a 40% chance of a rate hike at the September FOMC meeting, though not much has changed on the broader futures curve over the past week. Fed watchers will be paying attention to news out of the Fed's annual Jackson Hole symposium.

Momentum continues to take a breather, with the Morgan Stanley US Momentum Index trading lower throughout the week. The selloff in government bonds has been impacting the momentum trade, potentially due to the large number of AI-related companies that have been trading in the momentum basket. As they have begun to look to debt financing for more of their capex, the increase in borrowing costs may be impacting their market valuations.

The Nasdaq 100 index ($NDX) is on track for modest weekly gains, though I would characterize this week's price action as a healthy period of consolidation above the 50-day SMA following a strong bounce off the July 29th lows. The lows on that day essentially coincided with the implosion of Situational Awareness and strong earnings reports from AMZN & MSFT. There were several fundamental data points around the AI secular growth story that are likely supportive of tech – Nvidia's Jensen Huang partnering with six major Wall Street asset managers to establish a $500B financing platform for AI infrastructure; AI server maker Super Micro issuing strong guidance (revenue 25% above analysts estimates) and SanDisk forecasting strong growth out until 2030 at yesterday's Analyst Day. As for the NDX, the prior all time high (30,762) appears to be the next level of resistance to transcend, but otherwise the technicals are bullish.

Near-term technical translation: moderately bullish

The Bitwise 10 Large Crypto Index is up 25% since last Friday, with bitcoin up 23% and ether up 28% at the time of writing. Earlier in the week the CFTC announced Reg Crypto, while the Treasury announced intentions to buy back long-dated bonds, sparking a short squeeze in bitcoin.

As of a week ago, the weighted average of shorts was near $72k, while that of longs was near $62k. At $65,000, a 10% move higher would have put $10B in short open interest at risk of liquidation, while a 10% move lower would have put about $7B in longs at risk of liquidation. It's important to note that these are estimates and past short squeezes have typically liquidated less than these estimated amounts, while long flushes have often liquidated more. Wednesday and Thursday saw over $2 billion in levered shorts liquidated, with more liquidations occurring today.

Jim Ferraioli , Director of Digital Currencies Research and Strategy, authored this report.

The squeeze continued overnight, with bitcoin nearly reaching $80,000 this morning. While short squeezes are typically short-lived, and the rally may need to digest some of these fast gains, it may have ended the debate as to whether the low of the bear market was in. Since reaching $60,000 in early February, bitcoin has held that level over the past six months. Now ten months from the October 2025 peak, the bears may be capitulating following this squeeze. Bitcoin is now above the active investor cost basis ($76,000), a measure of the average cost paid by investors who acquired bitcoin in secondary markets. The ETF cost basis still sits near $83,000. A sustained hold above these levels would indicate that the average bitcoin investor is now at a profit, which has historically been a signal that more levered exposure to bitcoin, such as Digital Asset Treasury companies, may become more attractive relative to spot. An updated measure of short clusters suggests there is less risk of liquidations around these price levels following the short squeeze.

Market breadth attempts to capture individual stock participation within an overall index, which can help convey underlying strength or weakness of a move or trend. Typically, broader participation suggests healthy investor sentiment and supportive technicals. There are many data points to help convey market breadth, such as advancing vs. declining issues, % of stocks within an index that are above or below a longer-term moving average or new highs vs. new lows.

This Week's Notable 52-week Highs (109 today): Airbnb Inc. (ABNB + $0.51 to $185.64), Bank of America Corp. (BAC + $0.20 to $64.29), Cardinal Health Inc. (CAH + $0.44 to $231.68), Eaton Corp. (ETN + $2.34 to $455.67), JPMorgan Chase & Co. (JPM + $1.86 to $364.97), Palo Alto Networks Inc. (PANW - $9.50 to $386.50)

This Week's Notable 52-week Lows (55 today): AppLovin Corp. (APP + $8.12 to $320.79), ON Holding AG (ONON + $0.43 to $32.02), Post Holdings Inc. (POST - $0.71 to $79.83), Pilgrim's Pride Inc. (PPC + $0.05 to $27.65), Universal Corp. (UVV - $0.09 to $44.80), Wingstop Inc. (WING + $6.44 to $120.34)