Personal Consumption Lags, U.S. Stocks Open Higher

Today marks the final trading session of July and a triple-digit positive open for the DJIA. The first hour of business has been kind to U.S. stocks, with both the DJIA and S&P 500 posting nice rallies. It appears that traders are receptive to risk, completely disregarding the lagging Core Personal Consumption Expenditures numbers released during the pre-cash open.

A Look At Core Personal Consumption

On the heels of last week’s 4.1% GDP figure, a majority of traders expected to see growing consumption. This was not the case, as the metrics came in on the low side:

Event                                                                              Actual     Projections

Core Personal Consumption (MoM, June)                     0.1%               0.1%

Core Personal Consumption (YoY, June)                       1.9%               2.0%

Personal Consumption (MoM, June)                              0.1%               0.1%

Personal Consumption (YoY, June)                                 2.2%               2.3%

The headliner of this group is the 1.9% underperformance of Core Personal Consumption (YoY, June). While this statistic came in the same as the previous release, it still disappointed expectations. The result has been an about-face from traders, with equities and the USD experiencing very little ill-will.

DJIA Technicals

The DJIA is back on the bull after a tough Monday session. At press time, September E-mini DOW futures are reflecting the positive sentiment with values firmly north of 25,000.  

Bottom Line: The bulls have dug their heels in at the Current Wave 38% Fibonacci retracement (25320) area. This is a key level moving forward. If it holds as downside support, then the Swing High at 25572 will be challenged in coming sessions.

For now, buying a pullback from the 38% retracement is not a bad way to join the action. With a concrete stop beneath Monday’s low at  25263, a long position from 25320 offers solid entry in anticipation of a bullish challenge of the Swing High (25572).

ABOUT THE AUTHOR See More

Shain Vernier

US Analyst

Shain Vernier has spent over 7 years in the market as a professional futures, options and forex trader. He holds a B.Sc. in Business Finance from the University of Montana. Shain's career includes stretches with several proprietary trading firms in addition to actively managing his own accounts. Before joining FX Leaders, he worked as a market analyst and financial writer.

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