Market analysis for Apr 4th, 2024

4/4/2024

We had another great day yesterday. I'd actually call it perfect. Not because we killed it with another $20,000 gain. Just the opposite. It was a steady, consistent result of many trades as the day progressed. Big up days can lead to big down days. I'd much prefer to eck out a few thousand dollars profit a day. My net liq ended up $4,100 on the day. It came from all over our model portfolio. NVDA and MSTR continued to provide most of the profits but our 0DTE's, once again were the stars. Eight total entries yesterday, including two 0DTE's on event contracts. One of those was, once again, on Bitcoin. It's not uncommon for us now to have 4-6 0DTE setups a day. I don't know where else you can get this level of volume. We are now on 19 consecutive days of making more than our $1,000 a day income goal from them. We are up $25,000. It also marks 65 consecutive, profitable trades. Bitcoin has added a whole new revenue stream for us.

Markets have flip floped back to a slight buy mode at the moment.

The reality is that we don't really have a directional bias right now in the market. We continue to just consolidate at these levels just under ATH's. We are going on a couple weeks now of no real action.

June S&P 500 E-Mini futures (ESM24) are up +0.30%, and June Nasdaq 100 E-Mini futures (NQM24) are up +0.43% this morning as investor attention turned to crucial U.S. jobs data due Friday after Fed Chair Jerome Powell reiterated that the central bank will likely reduce rates this year.

The ADP National Employment report on Wednesday showed private payrolls rose by 184K jobs in March, stronger than expectations of 148K. At the same time, the U.S. March ISM services index unexpectedly fell to 51.4, weaker than expectations of 52.8. In addition, the U.S. ISM services price paid sub-index fell to a 4-year low of 53.4 in March, trailing the 58.4 consensus.
Federal Reserve Chair Jerome Powell signaled on Wednesday that policymakers would await clearer indications of lower inflation before considering interest rate cuts. Powell mentioned that recent higher-than-expected inflation figures did not “materially change” the overall picture. He reiterated his anticipation that it will likely be appropriate to start reducing rates “at some point this year.” At the same time, Atlanta Fed President Raphael Bostic stated that it would probably be appropriate to lower interest rates in the fourth quarter, reaffirming his expectation of only one rate cut this year given the economy’s strength and a slower inflation decline.
Meanwhile, U.S. rate futures have priced in a 4.8% chance of a 25 basis point rate cut at May’s policy meeting and a 55.8% probability of a 25 basis point rate cut at the June meeting.
Today, all eyes are focused on U.S. Initial Jobless Claims data in a couple of hours. Economists, on average, forecast that Initial Jobless Claims will come in at 213K, compared to last week’s value of 210K.

8:30 ET
US Trade Balance for February
The US Trade Balance for February is an economic indicator that measures the difference between the value of the goods and services exported by the United States and the value of goods and services imported into the country during that month.
A positive trade balance indicates that exports exceed imports, which can contribute positively to economic growth and employment.
Conversely, a negative trade balance, or trade deficit, means that imports exceed exports, which can put downward pressure on economic growth and employment.
The US Trade Balance provides insights into the country’s international trade dynamics and its impact on the overall economy.
What to Expect
The United States, a significant importer of products, has been in a trade deficit since 1975.
While unlikely to influence markets, a smaller-than-anticipated trade deficit would signal faster growth in the United States, which might be interpreted as an upside inflation risk if it is far smaller than expected, or as a relief to recession fears if it is only slightly smaller.
US Weekly Initial & Continued Jobless Claims
The US Initial Jobless Claims report provides data on the number of individuals who filed for unemployment benefits for the first time during the previous week.
It serves as an indicator of the labor market’s health, with higher numbers indicating increased layoffs and economic instability, while lower numbers suggest a stronger job market.
Continued Jobless Claims, on the other hand, represent the number of individuals who remain on unemployment benefits after their initial claim.
What to Expect
Employment is one of the Fed’s mandates; yet, FOMC officials have stated that they consider a higher unemployment rate as consistent with their goal of returning to 2% inflation. This means that greater-than-expected jobless claims, implying higher unemployment, are likely to be interpreted by the Fed as good news for inflation’s return to target. This scenario might force US stocks to rise and the currency to fall.

Our trade docket for today: /HG, BB, CCL?, DJT, GLD, /ZN, /MCL, GOOG, IWM, LEVI, M, KRUS, BYRN, MSTR, SPX/NDX/Event contract/Bitcoin 0DTE's.

My lean today is neutral to slightly bullish;