The August nonfarm employment data, an important indicator for the FED's monetary policy, was announced. Employment in nonfarm sectors increased by 142 thousand people in August, but the data was below expectations. Expectations were for nonfarm employment to increase by 165 thousand people. In August, the unemployment rate in the US decreased by 0.1 points to 4.2 percent. This rate was in line with market expectations. In July, the unemployment rate was recorded as 4.3 percent.
The August manufacturing PMI announced by the Institute for Supply Management (ISM), one of the most important data on economic activity, increased by 0.4 points compared to the previous month and reached 47.2. However, the data came below expectations; expectations were for 47.5. Considering that the index was 46.8 in July, we understand that the contraction in the manufacturing sector continues. While growth was seen in 5 sub-sectors of the manufacturing industry in August, there was contraction in 12 sectors. The sectors that saw growth included primary metals, petroleum and coal products, furniture and related products, food, beverages and tobacco products, and computer and electronic products. The sectors that saw contraction were textiles, printing, non-metallic mineral products, plastic and rubber products, electrical equipment, tools and components, fabricated metal products, transportation equipment, wood products, machinery, paper products, and chemical products.
Following the PMI and employment data, the S&P 500 had its worst weekly performance since March 2023, when the process leading to the bankruptcy of Silicon Valley Bank began. The S&P 500 index lost 4.3 percent on a weekly basis. The Nasdaq index, on the other hand, recorded its weakest weekly performance since June 2022, down 5.8 percent. The Dow Jones index also finished the week down nearly 3 percent.
Kamala Harris' tax increase plan in particular has a very aggressive tax increase plan and I would say it is market disruptive. In other words, she is considering a 25 percent tax even on unrealized profits. If it enters with such a plan, I think it may also find a negative response from the voters. It increases corporate taxes. Maybe to finance the war, I don't know anymore. But it's not a very nice thing. Therefore, this has frightened the market a little bit, to be honest, on the American side. Last week, I was thinking about negativity and opening a hedge. This week, I'm even more negative, to be honest. In other words, there is clearly a head and shoulders, it broke down. I thought we should be careful about Friday's employment data. Non-farm employment came in below expectations. First, they brought it up and made a bull trap. Then they hit it hard down.
It's a very aggressive market, so it's quite difficult to trade. But here, frankly, you shouldn't go without opening a hedge. As long as Nasdaq generally doesn't exceed 19000, I will follow it as a downward trend. There was a double top in S&P, and the appearance of S&P also deteriorated. Here, it started to look slightly head and shoulders. Therefore, if the neckline, especially the 5150 level, is broken in S&P, a double top formation may work here. So I think it may be necessary to be careful below 5000. There will definitely be reactions, short squeezes. It will squeeze the shorts hard up, but here, frankly, an image has begun to emerge that will be shorted with every reaction.
Therefore, long-term investors in spot positions will of course make their own decisions, but I think we should be cautious. In other words, hedge funds have been selling technology for a long time, especially on the Nasdaq side. I was a little more positive on the Dow Jones, IWM, Russell side, but they are selling these and printing these. Dow Jones is also affected by the interest rate cuts. Maybe these side boards will be positively affected, but they carried the index with 7 boards, the main contractor of which was Nvidia. Therefore, as these deteriorate, they pull everything down in the index. Nvidia was last week, even on August 29 before the monthly closing, of course, when I constantly watch the chart, I started to have doubts, if Nvidia goes below 118, Bitcoin, Nasdaq will pull everything down. In fact, Bank of America published a buy report for Nvidia at $165 that day. I had also stated that it would pull the market down below 118. I guess I will be right.
Nvidia has also formed shoulders and shoulders. This is a bad formation, in other words, wherever it stops below 102, 85 - 60 dollars, in other words, the floodgates can open. Here, it will obviously receive a reaction from the averages. But this formation is already a bearish formation. If you are not currently short or have a short, your job will be difficult during the week. I had also said last week that I think a hedge should be made. But here, it is necessary to go above the hedge a little. In other words, this Nvidia has a serious downward margin below 102. Since it is a stock worth 3 trillion dollars, a sale of such a stock would affect everywhere. Don't get me wrong, I don't mean to scare you or anything. But I have to state what I see. I see this negatively.
This affects the whole world. There is no Bitcoin situation. Right now, the outlook is clearly weakening everywhere in the world. There are especially purchases of American bonds, and the hawkish statements of the Japanese Central Bank regarding the Japanese Yen. They were giving out free money in the Japanese Yen 1-1.5 years ago. Now the trend has completely reversed. The head of the Japanese Central Bank increased interest rates. He realized if he increased it even a little. So market players were borrowing in Japan and with this, they carried Nasdaq and Nvidia up. In other words, they carried America up with this. Now, when this carry trade ended, the cost of money started to increase. Therefore, exiting risky markets, and elections are slowly approaching. There is a depreciation in the dollar.
100 is still an important level in DXY. It has bounced from there twice, but I think it will probably break down to 95. There is also serious long potential in the Japanese Yen. This, of course, can trigger these head and shoulders that we see in terms of risky markets. So you see how the market is connected to each other. So for example, ounce gold, of course, I see it as a safe haven here. But for example, BofA said buy despite such high prices for the past two weeks. At the same time, it gave Nvidia a target of 165 when it was at 140, and Nvidia was at the top here and there was distribution of goods, frankly. They hit 102 from here anyway. I started to have doubts immediately after the balance sheet. Because the sentiment was very serious about buy, there was no sell. In other words, everyone was in the buying direction. There was no one saying sell Nvidia. In fact, this is already a warning sign in itself.
In other words, if there is such a crowded trade and everyone is saying buy, it means there is a problem. At least we should be suspicious, and since I was suspicious, I already mentioned these things, saying that 118 gold will go down. Therefore, if the sale hardens here, ounce gold also has the potential to be affected, there is a risk from here. In other words, there is already a negative discrepancy here in ounce gold on a weekly basis. I also have doubts about this, to be honest. I think there may be a pullback in ounce gold. Therefore, here under 2500, I think we should think short in ounce gold. We should expect a decline here. This is logical.
They always hit below 70000 in Bitcoin. Now I drew this last week and stated that around 50000 - 49000 could be the target. We came to 52000. This is a negative technical view. In other words, these descending tops and bottoms, in other words, there is a distribution of goods here. Therefore, if the global hardens as I think, there is a risk of selling, in other words, Bitcoin will be affected. I think short in Bitcoin, to be honest. The symmetrical triangle support was broken in Bitcoin. There was a reaction from the flag, the falling trend support, the weekly support of 52000. Now, under this 52000, I actually care about 49000. Because it reached technical approval at 49000, it should not fall below. In fact, under 48000, long term, except for Bitcoin carriers, frankly, short trade seems to gain weight here. The trend also breaks down here. Therefore, Bitcoin may start its downward journey to 46000 - 40000. Normally, it actually turns up by gathering shorts from here by scaring and scaring. But since the global outlook is bad, it is bad everywhere on the Bitcoin side, on the gold side. Cash is also a position.
I had stated that Brent oil may fall. At the end of August, I had started to express that I was expecting a break here. This sale will harden below 64. In other words, I was closer to the short side in this image here. There is a clear head and shoulders formation in oil after the corona collapse. But I didn't like these peaks here anyway. Below $64 is support, below this the sale will harden and when I look at the chart, there is a potential for this sale to harden, to be honest. I don't know if it will be as hard as Corona in the whole picture, but there is a mini Covid crash atmosphere. In other words, there is an environment where such a sale can harden. I think it is necessary to manage the risks here by hedging. Even if you are a long-term investor, I wrote a week ago that even Nvidia has a serious risk of losing value and this could pull down global markets. Therefore, I can say that please do not take risks that you cannot manage in this environment.
Now, the employment market and interest rate cut momentum should be followed closely in the upcoming period. The employment market TDI came below expectations on Friday. In fact, unemployment was not bad, but the FED previously published revisions. In other words, revisions are always downward. Because there is a serious white-collar layoff in America right now and I would say that the BLS is somehow making up these numbers with immigrants. In other words, all such problems are swept under the rug before the election anyway. They will say there is a recession in the future. Because prices are pricing in the recession.
The employment data is not too bad, it is not negative. Okay, it is slightly below expectations, in other words, there is a cooling in the employment market. But it is not negative, it is positive, in other words, even if the expectation is low, we cannot talk about a recession here, in a definitional sense. It is still held at a certain level. There is still a 25 basis point probability in the first place. The 50 basis point probability has increased, but I can clearly say that the market will force the FED to cut interest rates by 50 basis points. The FED may have already arranged this itself. Everyone is already expecting a rally in the stock market after the election. In other words, seasonality also shows this. Because the uncertainty will be lifted, but they may have made a 50 basis point increase before the election and prepared an environment for Kamala Harris to be elected. In other words, 50 basis points will also reflect positively on the stock market in the first place. We will see what happens next, I have doubts about what happens next.
But even if there is a collapse, there was a rally in the first place. Therefore, it is useful to trade the trend ahead here. The outlook is 25 basis points right now. In bonds, the 10-year - 2-year difference is slowly disappearing and usually after an average of 6 months, sometimes 2 months, sometimes a year, there has been a recession. But right now, of course, there is a deflationary pricing. We cannot talk about a recession right now. There is an election anyway, I have been saying for a long time that it will be adjusted accordingly. But I think the market will try to sell hard and force a 50 basis point interest rate cut here. But I think they have already arranged this themselves.
Weak economic activity data is putting pressure on energy prices. The OPEC+ group, formed by countries led by OPEC and Russia, postponed the planned oil production increase in October by 2 months due to oil prices falling to their lowest level in the last nine months.
The decline in oil prices is due to factors such as expectations for a political solution in Libya and global demand pressure. The barrel price of Brent oil fell to $70.98 per barrel, reaching its lowest level since May 2023 in futures transactions. Data from the US showed that employment growth in August fell short of expectations. The unemployment rate fell to 4.2%, indicating a steady slowdown in the labour market. As a result of these developments, oil prices on Friday pared the gains made on the negative employment data in the US. Oil suffered significant losses on a weekly basis as demand concerns weighed on the market, despite OPEC+ producers delaying planned supply increases.
The information, comments and recommendations contained herein are not within the scope of investment consultancy. Investment consultancy services are provided within the framework of the investment consultancy agreement to be signed between brokerage firms, portfolio management companies, banks that do not accept deposits and customers. The comments in this article are only my personal comments and these comments may not be appropriate for your financial situation and risk return. For this reason, investments should not be made based on the information and comments in my articles.
