Markets: US stock market pulls back after weak private jobs report. Gold rises, Dollar weakens and Treasury yields fall.
Last Friday, weaker than expected Non-Farm Payroll data triggered a sell-off in the risk assets from the key levels we had identified. Gold was the beneficiary, Dollar was weaker and the Yields fell.
Last week’s key economic data
Non-Farm Employment Change 73k vs 106k expected
Unemployment rate 4.2% vs 4.1% previous but as expected
ISM Manufacturing PMI 48 actual vs 49.5 expected
Last week’s weak Non-Farm employment report showed the job creation had significantly reduced and also the previous estimates were revised down. This led to a sell off in the risky assets and also President Trump fired Bureau of Labour Statics chief.
Week in review
Last Friday, the S&P 500 volatility index also known as the fear index was up 32.42% and on daily basis, closed above the 20 day moving average.
All major stock indices we follow here at Market | Chart | Pattern closed negative on the weekly basis as illustrated in the below histogram charts with the exception of the volatility indices.
On year to date basis the Asian indices such as South Korea’s KOSPI 200, Hong Kong’s Hang Seng index and the German DAX have far outperformed the US stock indices as can be seen in the chart below.
Sector performance in the US markets
All sectors with the exception of the Utilities returned negative returns for the investors past week. As the volatility picked up in the last couple of day of the week, investors sought safety in the utilities sector.
KRE which is the regional banking ETF and the XRT which is the Retail ETF were both the worst performed and down -5.02% and -4.79% respectively.
On Year-to-date basis, the Industrial sector’s sub-sector Aerospace & Defence is the best performer and is up 29.46%. Technology, Industrials and the Financial Services are amongst the best performers on YTD basis.
Stocks Outperforming the S&P 500
Despite the market being down last week, some stocks were stronger than the overall S&P 500 index.
Markets
VIX a.k.a the fear index
VIX closed above the 20 DMA on the daily chart. Last Friday, the index was up 21.90%.
Bitcoin - BTCUSD
After hitting our target of 120K as discussed in the newsletter in the previous week, the Bitcoin as gone sideways for the past 3 weeks. On the weekly chart, we do have a completed AB=CD (1.618 x AB) formation.
On the daily chart, we can see the the market has retraced nearly $11500 and this is a symmetric move to the previous AB=CD correction that took place between the 22 May 2025 and 22 June 2025.
The daily chart does have a possible higher target of about 125K, however, if the market begins to close below the $110K/coin on two consecutive daily closing basis, it could lead to further pullback possibly to 105k which is the 38.2% Fibonacci retracement and below that would mean the coin is entering a further corrective time period.
Ethereum
Ethereum turned 10 years old! We have seen the coin reach nearly $5k and then retrace to about $750/coin in 2022. In 2025, ETHUSD has preformed really well, however, the gain seems to be capped around the $4k/coin level at the 78.6% Fibonacci retracement level.
Dollar
Over the past couple of weeks, US Dollar had been getting stronger, however, the bearish symmetry is intact on the weekly chart as shown by the blue lines.
Dollar still posted a weekly gain, however, there is a chance the dollar could turn from here and we could see our target of 95 hit on the dollar index futures as illustrated by the point ‘D’. on the weekly chart.
The month of July posted a gain for the Dollar, the shaded region presents the pattern formation we are watching for should the dollar index reach that level.
On the daily chart, the resistance came from the 61.8% retracement and close to the AB=CD highlighted by the black line.
USDJPY
USDJPY and the 10-Year Treasury Note have a good correlation as can be seen in the chart below.
You can see, the tops highlighted by the red arrow and the bottoms highlighted by the green arrows co-inside nicely. What we can gather from the above chart is if the yields are likely to fall, the JPY is going to strengthen against the dollar. Last year from 11th of July 2024, we had the unwound of the carry trade. This could rear its head again, particularly, if the Fed decide to cut rates. BOJ is in the process of raising rates and a decline in the US interest rates could lead to the unwound of the carry trade, which in the past year caused short lived but a sharp sell off in the markets.
As the weak Non-Farm Payroll data sparked the speculation of a possible rate cut by the Fed in September, we saw the sharp decline in the USDJPY pair and also a fall in the US Treasury yields.
The USDJPY closed right at the 20 DMA, close to the 38.2% Fibonacci retracement.
EURUSD
EURUSD on the weekly chart completed our AB=CD pattern as can be seen by the purple line. The market consolidated for 3 weeks and finally pulled back into the 38.2% Fibnacci retracement close to the symmetry as shown by the black lines on the chart.
On the daily chart, we can see that the pair pulled back into the shaded area pattern. This strong move indicates, as long as the 1.1370 is held, we could see the pair rally higher.
GBPUSD
British pound has also pulled back after completing the ABCD pattern on the weekly chart.
However, based on the daily chart, it formed a pattern formation which indicates strong support and the pair could rally.
Debt Markets
2-Year Treasury Note
In our past newsletter we wrote ‘Bearish Symmetry in the yields has kept the rise in the yields capped. A break below the 20 day moving average as shown by the blue line on the chart could accelerate the yields lower.’
This is exactly what we saw last Friday, the yield on the 2 year Treasury note fell by -7.09%! This is a strong indication of lower interest rates to come and also perhaps a reflection on the economy as well due to the weaker than expected Non-Farm payroll jobs report.
The target for us on the 2-Year T-Note is 3.2% to 3%.
10 Year Treasury Note
Last Friday, we saw a massive drop of -3.19% on daily basis on the 1- Year yields. The price firmly closed below the 20 day moving average and the 200 DMA. Our target on the 10 Year T-Note is 3.7%.
It is beginning to look that we might be able to achieve it as we complete the AB=CD at 3.7%.
30 Year Long Bond Yield
The rise in yield was concerning, however, the AB=CD pattern highlighted by the blue line kept the rise in yields in check. Yields are likely to move lower as we have had a big move lower last Friday.
Comex Gold
In our previous newsletter we wrote: ‘Gold is frustratingly range bound. The key for us is the $3250/oz level. As long as this low is held, it is point C of our 1:1 projection to a shorter term projection into $3550/oz to $3600/oz levels.’
Shorter term, we have a pattern with 1:1 projection at $3416/oz as shown in the highlighted region.
Last Friday, this price objective was achieved. With this strong close for Gold, the chances are the price is likely to move higher, however, we could see some pullback first.
Markets
Several World Stock indices that we follow have completed AB=CD patterns with a number of them with the CD leg is 1.272 or 1.618 times the AB leg.
Charts to follow …
S&P 500 cash symbol SPX made a new all time high last Thursday and printed a high of 6427.02. This came very close to our exact target of 6500 print that we have been looking for before the market rotated lower and closed -2.36% lower for the week, taking out the lows of last week. Further, on daily closing basis, SPX closed below the 20 DMA.
Nasdaq 100 cash symbol NDX completed the AB = CD (1.618 x AB) target we have been looking for. The index closed -2.19% or -508.93 points lower for the week.
Dow Jones Industrial futures lost a little over -3% for the week.
NYA the New York Stock Exchange index which has over 1600 stocks including the ADRs is a broad index, lost -682.76 points or -3.26%.
The weakest of all the US indices that we follow was the Russell 2000. The RTY i.e. the Russell 2000 futures closed -95.9 points i.e. over -4.22%.
However, this pullback that we have seen is not surprising, as we discussed in the newsletter When the only way is up, the only way is down.. was a counter factual as the markets were making new all time highs, the markets were also completing the patterns formations and the precise price levels that we had forecasted months in advance and were carefully watching.
Read on …
As we have moved into the summer months, the seasonality has a clear pattern formation. We could see volatility in the marketplace with a possible low coming in September or possibly in October.
In our past newsletter we discussed our timing model which indicated a timeframe starting by mid July, now, the model might have been a couple of weeks too soon, it indicates the timing has kicked in and the next timing date is in September. We have seen a volatile August in 2024 which was also an election year. 2022 bear market ended in October 2022 and in 2023 the sell off ended in October as well. Could we see repeat of sort in 2025?
They key level for us to be watching in SPX is the 6100, consecutive closes below this level indicate a deeper pullback perhaps. Most import for us is that the 7th of April 2025 lows are to be held in all the major indices i.e. SPX, NDX, Dow Jones Industrials, NYA and Russell 2000.
Let’s take a look at the chart…
SPX - S&P 500 Cash
Nasdaq 100 Cash - NDX
Nasdaq 100 made a new all time and also met our long term target. We have AB=CD where CD leg is 1.618 x AB.
NYA - New York Stock Exchange Index
This index represents over 1600 stocks including ADRs.
Russell 2000
Russell 2000, the small caps index, is the weakest of all the major indices we follow. The gains since April 7th lows have been capped by the 78.6% Fibonacci retracement.
World Markets
India’s SENSEX
India’s leading index is in the resistance zone and the index topped back in September 2024.
German DAX
German DAX completing a long term AB= (1.618xAB) CD leg.
UK’s FTSE 100
FTSE 100 is looking better, perhaps, due to a possible rate coming from BoE (Bank of England) soon?
Disclaimer
This post, any text used in the post, any images, video, audio and links be it internal or external are for information and educational purposes only and not a financial advice.