Market analysis for Aug. 23rd, 2024

Welcome back to Friday and Jackson Hole day! Yesterday was a tough one for me. As you can see below, I had some good and some bad and a lot of undetermined going into today. The good was scalping! We banked $2,300 of profit but our efforts yesterday could result in almost a $6,000 total payoff come Monday. We loaded up on put covers on our short /MNQ position (as you can see by the higher buying power). We also left one long call yesterday going into today. That looks to cash flow for us at the open today. Our other 0DTE's were all challenged on the put side. Most were rolled to today. One was taken as a loss and one rolled at a debit so even with futures up nicely this morning, working the call sides today will be important to get back to green. Here's a look at my results. 

Markets retraced yesterday and briefly bounced our technical matrix to a neutral rating but with the futures rebounding this morning its back to bull mode. 

I think all of us were thinking we were due for a retrace. 10 days of straight up (technically 9 our of 10) means we are usually streched and need a break. We got it yesterday. It seemed like a big move but the NDX came down and held it's 50DMA. All yesterday really did was bring us back to a previous consolidation zone. 

​September S&P 500 E-Mini futures (ESU24) are up +0.51%, and September Nasdaq 100 E-Mini futures (NQU24) are up +0.60% this morning as market participants awaited Federal Reserve Chair Jerome Powell’s Jackson Hole speech for more clues on the amount and timing of interest rate cuts. 
In yesterday’s trading session, Wall Street’s major indexes ended in the red. Snowflake (SNOW) tumbled over -14% after the company reported weaker-than-expected Q2 billings and provided Q3 product revenue guidance that failed to impress investors. Also, chip stocks lost ground, with Intel (INTC) slumping more than -6% to lead losers in the Dow and Advanced Micro Devices (AMD) falling over -3%. In addition, Urban Outfitters (URBN) slid more than -9% after reporting weaker-than-expected Q2 retail comparable sales growth. On the bullish side, Zoom Video (ZM) surged about +13% after the company posted upbeat Q2 results and raised its full-year guidance.
Economic data on Thursday showed that the U.S. S&P Global manufacturing PMI fell to an 8-month low of 48.0 in August, weaker than expectations of 49.5. Also, the number of Americans filing for initial jobless claims in the past week rose +4K to 232K, in line with expectations. At the same time, the U.S. August S&P Global services PMI unexpectedly rose to 55.2, stronger than expectations of 54.0. In addition, U.S. existing home sales increased +1.3% m/m to 3.95M in July, stronger than expectations of 3.94M.
“The U.S. economy overall has, thus far, been robust enough to take an extended Fed rate pause,” said Don Rissmiller at Strategas. “But there’s a clear case for rate cuts soon.”
Boston Fed President Susan Collins stated on Thursday that it would soon be appropriate for the U.S. central bank to start a rate-cutting cycle. “I think a gradual, methodical pace once we are in a different policy stance is likely to be appropriate,” Collins said. Also, Philadelphia Fed President Patrick Harker said that upcoming economic data will guide the appropriate magnitude of the Fed’s first interest rate reduction. “In September, we need to start a process of moving rates down,” Harker said. At the same time, Kansas City Fed President Jeffrey Schmid stated that he wants to see more economic data before backing any decision to start lowering interest rates. “I still think we could see a little bit of a demand pickup if we’re not careful with the decisioning,” Schmid said.
Meanwhile, U.S. rate futures have priced in a 75.5% probability of a 25 basis point rate cut and a 24.5% chance of a 50 basis point rate cut at the September FOMC meeting.
Today, all eyes are focused on Fed Chair Jerome Powell’s address at the central bank’s annual economic symposium in Jackson Hole, Wyoming. Market participants will be keenly focused on what he indicates about the pace and timing of rate cuts in the coming months.
On the economic data front, investors will focus on U.S. New Home Sales data, set to be released in a couple of hours. Economists, on average, forecast that July New Home Sales will stand at 624K, compared to the previous figure of 617K.
The U.S. Building Permits data will also be reported today. Economists expect July’s figure to be 1.396M, compared to 1.454M in June.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 3.857%, down -0.13%.

My bias today is bullish. My bias yesterday was bullish. That didn't pan out very well! I think Powell says all the right things today and I think yesterdays retrace was a healthy "base building" exercise vs. a wholesale change of direction. 

Let's take a look some key intra-day 0DTE levels for me.
/ES;  You can see on the daily chart 5599 is a key level of support. As long as we hold that I stay bullish.

On the 2 hr. chart the last 18 hrs. have been supportive.  Bulls need to break above 5633 first then 5647. Bears need to break back below 5614 and if they can drive down below 5582 then look out below.

/NQ; The Nasdaq pulled it off yesterday (kind of). It basically held its 50DMA. That's a key "line in the sand" area.

/NQ; On an intra-day 2 hr. chart, once again, the last 18 hrs. have been supportive. There are two key levels for me today. 19805 for bulls. This is the 50 period M.A. on the 2 hr. chart. For the bears it's 19613 which is PoC. These are THE two key levels for me. Between them is  just chop. 

Our trade docket for today:
Fridays are for #1. Locking in any profits. #2. De-risking the acct. #3. Raising buying power so we can do it all over again next Monday. /MCL, /ZC, /ZN, CAVA, CRM, DELL, DIA, DJT, GLD/NEM, INTU, IWM, NVDA, SPY/QQQ, SHOP, 0DTE's. Scalping is a question mark today. We've already got a long call going into the open and a big cover on our /MNQ for Monday exp. 

I always like to have a solid Friday to kick off the weekend. Let's see what we get today. We need some help with our rolled puts. We'll be patient and not do anything with our 0DTE's until after Powell starts speaking.