Market analysis for Aug. 29th, 2024

Welcome back traders! Well..I should be calling myself Nostradamus. I laid out my whole plan for yesterday. I said it would be bearish. I said it would get worse as the day went on and, I laid out, what I thought was a very sound rationale around NVDA beating estimates and yet it goes down. I then built three trades around NVDA (bullish, bearish and neutral) and while it's too early to tell, it looks like all three have a shot at profits!

I should be proud of the work and research I put in yesterday, and I would, except I had a hard time following my own convictions! We had a short /MNQ and long QQQ puts in our scalping room going into the open. I had said that I wanted to let the QQQ's run and I wasn't going to cover the /MNQ. I didn't do either! Both cost me. We also got so much premium today on our 0DTE's that we had no need to ever try to sell the put side. I thought I was patient. Even though I waited until we were down 100 points on NDX, it was still too early and not really needed.
Look, we had a wonderful day. Most traders would love to get these types of daily profits but...we've got to learn. 
What did I learn yesterday? #1. Sitting on your hands is a skill. Be patient. #2. If you have a plan and have conviction in your plan then FOLLOW YOUR PLAN!

Let's take a look at our day yesterday:

Let's take a look at the market. This is so typical (and predictable) on events like the NVDA earnings. It's a large cap which moves markets. We get the futures selling off after the report and then is slowly digests it and bounces back. We bought a long call on /MNQ last night looking for the rebound and just cashed it in.

Once again, we find ourselves just stuck in a massive consolidation zone. 

We don't really have a sentiment bias here with the fear and greed index.

Market internals still look pretty darn healthy

​September S&P 500 E-Mini futures (ESU24) are up +0.27%, and September Nasdaq 100 E-Mini futures (NQU24) are up +0.22% this morning as market participants shrugged off Nvidia’s underwhelming sales forecast and looked ahead to a raft of U.S. economic data.
Nvidia (NVDA) fell over -2% in pre-market trading as an underwhelming Q3 sales forecast as well as issues in the production of its highly anticipated Blackwell chips overshadowed strong Q2 results and a $50 billion share buyback program.
In yesterday’s trading session, Wall Street’s major indices ended lower. Super Micro Computer (SMCI) plummeted over -19% and was the top percentage loser on the S&P 500 and Nasdaq 100 after the AI server maker said it would delay filing its annual financial disclosures. Also, chip stocks slumped, with Arm (ARM) falling more than -4% and Micron Technology (MU) sliding over -3%. In addition, Foot Locker (FL) plunged more than -10% after lowering its FY24 gross margin forecast. On the bullish side, Chewy (CHWY) surged over +11% after the online retailer of pet products reported stronger-than-expected Q2 adjusted EPS and lifted its full-year adjusted EBITDA margin guidance. Also, Box (BOX) climbed more than +10% after the company posted upbeat Q2 results and boosted its FY25 guidance.
Atlanta Fed President Raphael Bostic stated Wednesday that it “may be time” to lower rates, but he is still waiting for more data to justify cutting interest rates next month. “I don’t want us to be in a situation where we cut and then we have to raise rates again. So, if I’m going to err on one side, it’s going to be waiting longer just to make sure that we don’t have that up and down,” Bostic said.
Meanwhile, U.S. rate futures have priced in a 63.5% chance of a 25 basis point rate cut and a 36.5% probability of a 50 basis point rate cut at the September FOMC meeting.
On the earnings front, notable companies like Dell Technologies (DELL), Marvell Technology (MRVL), Autodesk (ADSK), Lululemon Athletica (LULU), Dollar General (DG), Best Buy (BBY), Ulta Beauty (ULTA), and Gap (GAP) are slated to release their quarterly results today.
On the economic data front, all eyes are on the Commerce Department’s second estimate of gross domestic product, due later in the day. Economists, on average, forecast that U.S. GDP will stand at +2.8% q/q in the second quarter, compared to the first-quarter figure of +1.4% q/q.
Also, investors will focus on U.S. Pending Home Sales data, which came in at +4.8% m/m in June. Economists foresee the July figure to be +0.2% m/m.
U.S. Initial Jobless Claims data will be reported today. Economists predict this figure will hold steady at 232K, consistent with last week’s number.
U.S. Wholesale Inventories preliminary data will come in today as well. Economists expect July’s figure to be +0.3% m/m, compared to +0.2% m/m in June.
In addition, market participants will be anticipating a speech from Atlanta Fed President Raphael Bostic.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 3.824%, down -0.49%.

Trade docket today: PDD, CRWD, NVDA, PYPL, QQQ, SMCI, SMH, /ZN, GLD, /MCL, LULU, DELL, 0DTE's.
Quick note: all three of our NVDA trades from yesterday look to cash flow today!

My bias today is neutral to bullish. I think we absorb the NVDA move and flatten out then move higher. 

Let's take a look at the intra-day 0DTE levels that I'm looking at.
​/ES; Two key levels for me today. 5638 is the resistance for bulls. It's also the PoC on 2hr. chart. 5595 is a decent support level from yesterday.

/NQ; Nasdaq is still a little more beaten up than SP500. Two key levels for me today. 19578 to the upside. That's close to the 50 period M.A. 19271 to the downside. That's the 200 period M.A.

Let's make it happen today folks. We've got a lot of good setups to add to today that we initiated yesterday.