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• US stock markets experience volatility as Dow Jones hovers near flatline.
• S&P 500 recovers to gain 0.3%, Nasdaq rebounds about 0.5%.
• Tech sector leads, with Nvidia surging over 4%, Amazon up 1%, and Apple up nearly 0.9%.
• U.S. Steel rises 29% after rejecting $7.3 billion offer, Tesla falls 1.5% due to price cuts in China.
• Alibaba loses 2.2%, while traders await retailers’ earnings, FOMC minutes, and economic data.
• Dollar index hits 103, a 5-week high, on strong US producer inflation report.
• Fed rate hike expectations rise, despite recent data showing headline and core inflation slightly below forecasts.
• San Francisco Fed President Daly cautions that inflation battle isn’t won yet.
• Markets focus on Home Depot and Walmart earnings, FOMC minutes, and upcoming economic data.
• US 10-year Treasury note yield reaches 4.17%, nearing 9-month high, amid higher rate bets.
• Trader probabilities for steady September fed funds rate at 89%, November hike at 38%.
• FOMC minutes and Treasury debt sales are key factors in shaping market sentiment.

The E-mini S&P 500 has engaged in a rotational behavior, as traders sought to capitalize on the extremes of the previous balanced volume profile structure. However, the current higher dollar and positive volatility continue to exert pressure, particularly around the upper extreme.

Analyzing the daily interval reveals an imbalanced downside trend that has persisted over the past few days. Yet, the market has found support through absorption around the previous distribution area, contributing to price increases aided by buyer activity and short covering.

Given the mixed perspectives ranging from daily to intraday, market participants appear to be consistently relying on the aforementioned extreme levels.

An examination of the options landscape reveals a heightened interest in upper first standard deviation prices, though this has resulted in mixed viewpoints, ultimately leading to a balanced market behavior.

Analyzing the COT data as of August 8th, we observe that Asset Managers have been liquidating long positions while building short positions. Conversely, the Leveraged sector maintains a long exposure, with short covering leading to an increase in net hold positions during the preceding week. This mixed data suggests the potential for a short- to median-term balanced behavior, which is subject to the impact of the ongoing monetary policy trajectory, marked by hawkish statements.

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