Market analysis for July 31st, 2024

Welcome back to FOMC day! Lots of traders dread today and some simply take the day off. We love it! Mostly we just sit on our hands all day until the last 90 minutes. That's when things get exciting. 

I'm super happy with our trading results from yesterday. I was down 8-10K for a good part of the day. We worked and worked and worked our 0DTE's and all in all I have to say it was a good day. Let's take a look at our results.

I'd like to say we are out of the woods and all our rolled trades but alas no. We've still got a rolled call side on NDX that we will need to deal with today. 
​Let's take a look at the markets. Futures are up this morning. Retracing everything the market gave away yesterday. It's like yesterday never happened. Back to a bullish bias.

There was some damage done yesterday with the QQQ's continuing to be the weakest, staying down below the 50DMA. The SPY however, found support there and held firm.

The IWM and DIA seem impervious to anything negative. Their strength is impressive.
Most of the internal metrics we look at continue to point to bullish price action.

Our trade docket and plan of attack for today: /ES (theta fairy), /MNQ, QQQ, 0DTE's, Scalping all on the agenda today as well as a bunch of potential earnings plays in META, QCOM, ARM, EBAY, CVNA, ETSY, MGM, RIG, RIOT. As far as our 0DTE implementation today, we usually wait until the last 90 min. of the day to put them on. FOMC minutes come out and 30 min. later Powell speaks. About 15-20  min. into his speech is usually when the algos pick up on a word of phase he uses and the markets start to move. Unually the first intial move gets faded. That's when we like to  pounce.

The 1 day VIX is showing the I.V. we like to see.  Premiums should be excellent today.

NYSE Up volume is still positive vs. down volume.

The RUT continues to have elements that keep hitting new highs.

But I believe we are overstretched here on the IWM.  Diminished buying vol. Price action stalled out the last three days and Stoch in over bought zone. 

No levels or bias lean for me today as is the case every FOMC day. We will just trade what we see. Here's your cheat sheet for Powell today.

​September S&P 500 E-Mini futures (ESU24) are up +0.98%, and September Nasdaq 100 E-Mini futures (NQU24) are up +1.57% this morning as expectations mounted that Fed Chair Jerome Powell might signal a potential rate cut for September, while investors also awaited a fresh batch of U.S. economic data and an earnings report from Meta Platforms.
In yesterday’s trading session, Wall Street’s main stock indexes closed mixed. CrowdStrike Holdings (CRWD) slumped over -9% and was the top percentage loser on the Nasdaq 100 after CNBC reported that Delta Air Lines had hired lawyers to seek compensation from the cybersecurity firm and Microsoft over the operations meltdown experienced during the global IT outage. Also, Merck & Co. (MRK) slid more than -9% and was the top percentage loser on the S&P 500 and Dow after the pharma giant cut its full-year adjusted EPS forecast. In addition, Procter & Gamble (PG) fell over -4% after reporting weaker-than-expected Q4 sales. On the bullish side, Howmet Aerospace (HWM) surged more than +13% and was the top percentage gainer on the S&P 500 after the supplier to Boeing lifted its FY24 adjusted EPS guidance. Also, PayPal Holdings (PYPL) climbed over +8% and was the top percentage gainer on the Nasdaq 100 after posting upbeat Q2 results and boosting its annual earnings guidance.
A Labor Department report on Tuesday showed that U.S. JOLTs job openings fell to 8.184M in June, compared to an expected figure of 8.020M. Also, the Conference Board’s U.S. July consumer confidence index inched up to 100.3, stronger than expectations of 99.7. In addition, the U.S. S&P/CS HPI Composite - 20 n.s.a. rose +6.8% y/y in May, stronger than expectations of +6.5% y/y.
Today, all eyes are focused on the Federal Reserve’s monetary policy decision later in the day. While the Fed is anticipated to maintain benchmark rates at the highest level in more than two decades, market participants will be closely monitoring for any hints that the start of policy easing is near.
“If the Fed does not signal a September rate cut, markets could get a bit ugly given recent tech weakness - especially if earnings underwhelm,” said Tom Essaye at The Sevens Report.
Meanwhile, U.S. rate futures have priced in a 99.7% chance of at least a 25 basis point rate cut at September’s monetary policy meeting and a 60.6% probability of a 25 basis point rate cut at the November meeting.
On the earnings front, notable companies like Meta Platforms (META), Qualcomm (QCOM), Western Digital Corporation (WDC), Arm Holdings (ARM), Boeing (BA), eBay (EBAY), Altria (MO), and Marriott International (MAR) are slated to release their quarterly results today. 
On the economic data front, investors will direct their attention to the U.S. ADP Nonfarm Employment Change data, set to be released in a couple of hours. Economists, on average, forecast that the July ADP Nonfarm Employment Change will stand at 147K, compared to the previous number of 150K.
Also, investors will focus on the U.S. Chicago PMI, which stood at 47.4 in June. Economists foresee the July figure to be 44.8.
The U.S. Employment Cost Index will be reported today. Economists foresee this figure to arrive at +1.0% q/q in the second quarter, compared to the first-quarter number of +1.2% q/q.
U.S. Pending Home Sales data will come in today. Economists expect June’s figure to be +1.4% m/m, compared to last month’s figure of -2.1% m/m.
U.S. Crude Oil Inventories data will be reported today as well. Economists estimate this figure to be -1.600M, compared to last week’s value of -3.741M.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.138%, down -0.07%.

Let's have a great day folks. FOMC days always give us the potential we need. It's up to us to properly execute on that.