Market analysis for Aug. 19th, 2024

Welcome back to a new week of trading! One of the things I love about trading is that, for good or bad, no matter how your week went, it all starts over again today! Last Thursday was amazing for us. We crossed over $300,000 in YTD profits on our 0DTE's and our 31% gain on the day was a record as well. That being said, Friday was really a better day for us. Pretty mellow. We had an SPX rolled call side to deal with and with the Vampire trade that also means we didn't have any NDX 0DTE options to works with. Big up days are great but they usually come with more buying power and more stress. Our Friday effort didn't quite hit our $1,000/day goal but it was close and if we can do that consistenty that's all we need to justify our time and effort here. Let's take a look at our results from Friday.

We are slowly getting back into our "normal" setups. This Weds. we'll be back on the QQQ's for Scalping, in addition to our new /MNQ addition. This will mean I'm committing more capital to the scalping effort. We'll also get back to our Event contracts as the setups are starting to look a little better. There's also a good chance we can get a Theta fairy on tonight!

Let's look at the markets for this week.
​We had the best week of the year last week!

Buy mode is clinging on. It's tenious but...bullish is bullish. You can see how explosive the bullish retrace was on all the major indices last week. It's also brought us up to another level of consolidation.

Let's take a look at the I.V. and expected moves this week: We look to be starting the week in a "sweet spot". I.V. isn't elevated but it's not in the dumps either. It could be a good week for our 4DTE SPY/QQQ setups.
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Oh what a difference a few days make. Our shorting of the VIX was such a great trade and one of my favorites. Unfortunately, those setups don't come along very often. VIX is back to a normal range. 

September S&P 500 E-Mini futures (ESU24) are down -0.02%, and September Nasdaq 100 E-Mini futures (NQU24) are down -0.21% this morning as investors looked ahead to the release of the minutes of the Federal Reserve’s latest policy meeting, Fed Chair Jerome Powell’s speech at Jackson Hole, and earnings reports from a diverse group of prominent companies.
In Friday’s trading session, Wall Street’s major averages ended in the green, with the benchmark S&P 500 and blue-chip Dow rising to 2-week highs and the tech-heavy Nasdaq 100 climbing to a 3-week high. H&R Block (HRB) surged over +12% after the tax preparation company reported upbeat Q4 results, provided an above-consensus FY25 forecast, and announced a new $1.5 billion share repurchase program. Also, Coherent (COHR) climbed more than +7% after the company reported better-than-expected Q4 results and issued solid Q1 revenue guidance. In addition, Fox Corp. (FOXA) gained over +1% after Wells Fargo double-upgraded the stock to Overweight from Underweight with a price target of $46. On the bearish side, Applied Materials (AMAT) fell more than -1% after giving an in-line Q4 net sales forecast that disappointed investors looking for a bigger payoff from AI spending. 
Economic data on Friday showed that the University of Michigan’s U.S. consumer sentiment index stood at 67.8 in August, stronger than expectations of 66.7. At the same time, U.S. July housing starts fell -6.8% m/m to a 4-year low of 1.238M, weaker than expectations of 1.340M. In addition, U.S. building permits, a proxy for future construction, fell -4.0% m/m to a 4-year low of 1.396M in July, weaker than expectations of 1.430M.
Chicago Fed President Austan Goolsbee supported rate cuts on Friday after noting that the U.S. labor market and some leading economic indicators are showing warning signs and expressing concerns that unemployment will continue to increase. Goolsbee stated that the speed of transmission of lower rates would “depend on many factors” and indicated his support for a “gradual” rather than rapid pace of rate cuts.
U.S. rate futures have priced in a 71.5% chance of a 25 basis point rate cut and a 28.5% chance of a 50 basis point rate cut at September’s monetary policy meeting.
In other news, Goldman Sachs over the weekend reduced the probability of a U.S. recession in the next year to 20% from 25%, citing last week’s healthy economic data.
Meanwhile, Fed Chair Jerome Powell is scheduled to deliver the keynote address at the central bank’s annual economic symposium in Jackson Hole, Wyoming, on Friday. Market participants will be keenly focused on what he indicates about the pace and timing of rate cuts in the coming months. Earlier in the week, Fed Governor Christopher Waller, Fed Vice Chair for Supervision Michael Barr, and Atlanta Fed President Raphael Bostic will be making appearances.
“We look for Powell to signal that given recent progress, the Fed is likely to ease policy next month -  without fully committing to the size of the rate cut. We expect a 25 basis-point reduction,” according to TD Securities’ strategists.
Investors will also be monitoring a spate of economic data releases this week, including the U.S. S&P Global Composite PMI (preliminary), S&P Global Manufacturing PMI (preliminary), S&P Global Services PMI (preliminary), Crude Oil Inventories, Initial Jobless Claims, Existing Home Sales, Building Permits, and New Home Sales.
Retailers Lowe’s (LOW), Target (TGT), TJX (TJX), and Ross Stores (ROST), along with notable tech players such as Zoom Video (ZM), Snowflake (SNOW), Palo Alto Networks (PANW), Workday (WDAY), and Analog Devices (ADI), are among the prominent companies set to release their quarterly results this week.
In addition, market participants will pay close attention to the publication of the Federal Reserve’s minutes from the July meeting on Wednesday, during which Fed Chair Jerome Powell acknowledged progress on inflation and left the door open for a rate cut in September.
Today, investors will focus on the U.S. Conference Board Leading Index, set to be released in a couple of hours. Economists expect July’s figure to be -0.4% m/m, compared to the previous number of -0.2% m/m.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 3.868%, down -0.70%.

We don't have any really big news catalysts today so I'm leaning to a neutral to slightly bullish day today, After the massive push last week I think we are due for a pause.

Trade docket for today: /MNQ scalping. /ZN, DELL, DIA, GLD, DJT?, IWM, NVDA, PLTR, PYPL, SHOP, SPY/QQQ 4DTE's, 0DTE's. PANW, LOW, MDT potential earnings setups.

Open interest. You can see a big target on the 5630 SPX level. 

Let's take a look at some key, intr-day 0DTE levels for me today. 
/ES; From a bigger perspective their is a 100 point trading zone right now on the /ES. 5603 is a clear resistance zone that we broke through in July and hit again in Aug. 5503 is the 50DMA (green line) and could provide support in a drawdown.

Intra-day on the 2 hr. chart shows we've been coiled up since last Thurs. in a very tight range. A break above 5593 or below 5558 might get us moving again.

/NQ; The Nasdaq continues to be a tad weaker than the SP500. It's been clinging to it's 50DMA for a few trading sessions now.

On an intra-day basis we would need to push above 19688 or drop below 19463 to get a new directional move going. ​

Let's have a great day folks! There's a lot worse ways we could be out there slogging away, trying to make a living! Enjoy the process.