Second-Term August Curse, Dollar Hedge & Earnings Gauntlet: Key Levels for Aussie Investors

Second-Term August Curse, Dollar Hedge & Earnings Gauntlet: Key Levels for Aussie Investors

Wall Street is pricing in a third consecutive 20 % S&P 500 gain—an event last seen in the late-1990s bubble—while dark-pool clusters and seasonal data warn of a classic August shake-out. Below are the distilled takeaways and exact levels to watch.

• Macro Warning Lights
  • Warren Buffett indicator (market-cap-to-GDP) back above 220 %—a zone that preceded the 2022 draw-down.
  • Margin debt-to-GDP rising but still < 2021 peak; debt must exceed prior highs before a “proper crash” can occur.
  • Global liquidity in “stealth QE” since 2023—supportive until the final innings.
• Second-Term August Curse
  • Since the 1950s, every August of a second presidential term has delivered a negative S&P 500 return, averaging –3.4 %.
  • Expect reforms and policy uncertainty to peak in Q3, aligning with the statistical window for a 5–8 % garden-variety pullback.
• US Dollar: World’s Largest Hedge
  • Inverse head-and-shoulders forming on DXY; 99.00 is the neckline breakout.
  • Measured move targets 101.60; a stronger dollar historically coincides with equity weakness.
• Crypto Flows & Dark-Pool Prints
  • 2025 inflows already exceed all of 2024; Ethereum ETFs saw record weekly inflow, second only to the prior week’s all-time high.
  • Dark-pool clusters at ETH $3,950–$4,000; decisive break opens $4,600–$4,700.
  • Bitcoin consolidating above $120.5 k; momentum reset is healthy.
• Earnings Gauntlet: Six Names That Matter
  • Nvidia, Tesla, Meta, Microsoft, Apple, Amazon—expected to move 6–7 % post-print, translating to hundreds of billions in market cap.
  • Semiconductor index vs SPY ratio still bullish; any breakdown would signal broader risk-off.
• Key Levels This Week
  • S&P 500: 6,400 call-wall; break targets 6,465. Flattening breadth—watch healthcare & staples for rotation.
  • Nasdaq 100: pressing upper trend line; overbought but no reversal trigger yet.
  • Russell 2000: trapped in supply zone; needs reclaim for risk-on confirmation.
  • Gold: holding pennant, $2,350–$2,360 demand zone; upside capped while DXY strengthens.
  • Silver: watching $37.50–$37.80 for demand re-entry.
  • Tesla: gap filled at $320–$330; neutral until fresh catalyst.
• Data & Event Risk
  • US non-farm payrolls Friday 8:30 am AEST—likely volatility catalyst.
  • Central-bank speak and earnings releases provide the “excuse” for any macro unwind.

Positioning playbook: maintain trailing stops on momentum winners, consider partial profit into strength, and keep defensive sectors on the radar for rotation. The August seasonal headwind is statistically reliable, but timing the trigger—earnings, payrolls, or a DXY breakout—remains the art.