Market analysis for Aug. 30th, 2024

Welcome back to Friday! You're gateway to the weekend! I had a bad day at the office yesterday. We know the statistics....start pulling your profits as you get to 70% capture rates. We've become a bit of a victim of our own success as of late. Everythings been working so well that we get lulled into a sense of calm. The move up yesterday morning was something we planned and traded well. The retrace in the afternoon was not! Here's my results from yesterday. 

That's roughly about 4 days of profit down the drain. We rolled the biggest part of the NDX and that looks like its in a good position to recover $12,000 of yesterdays drawdown. Here's the roll. It's a 6DTE so I'll need to bring in 4K a day in profits on the call side IF the roll doesn't hit. I'll need to bring in $1,600 a day if it does. Clearly better if the roll works.

We did have some bright spots yesterday and a fun one was the NVDA earnings trades we did. We put on a Bullish, Bearish and Neutral trade setup, pre-earnings and booked profit on two of the three yesterday and it sure looks like we'll be booking profits on the third this morning. That's whats amazing about options. You can build a trade so that whether you're bullish or bearish you can BOTH make money!

Let's take a look at the markets: Bullish bias and I buy it. Things look supportive here after the NVDA induced slide.
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​September S&P 500 E-Mini futures (ESU24) are trending up +0.45% this morning as the prospect of lower interest rates and a slew of upbeat earnings reports boosted sentiment, while investors geared up for the release of the Fed’s first-line inflation gauge.
In yesterday’s trading session, Wall Street’s major indexes closed mixed, with the blue-chip Dow posting a new record high. Best Buy (BBY) surged over +14% and was the top percentage gainer on the S&P 500 after the consumer electronics retailer posted upbeat Q2 results and lifted its full-year adjusted EPS guidance. Also, Crowdstrike Holdings (CRWD) gained nearly +3% after the cybersecurity company reported better-than-expected Q2 revenue. In addition, Affirm Holdings (AFRM) soared over +31% after reporting stronger-than-expected Q4 results and providing above-consensus Q1 revenue guidance. On the bearish side, Dollar General (DG) plummeted more than -32% and was the top percentage loser on the S&P 500 after the discount retailer posted downbeat Q2 results and cut its FY24 same-store sales growth guidance. Also, Nvidia (NVDA) slumped more than -6% after the chipmaker’s Q3 revenue forecast fell short of the highest expectations.
The U.S. Department of Commerce’s second estimate of Q2 GDP growth was revised higher to +3.0% (q/q annualized) from the initial estimate of +2.8% due to an upward revision of consumer spending. Also, the Q2 core PCE price index was revised lower to +2.80% (q/q annualized) from +2.90%. In addition, U.S. pending home sales unexpectedly fell -5.5% m/m in July, weaker than expectations of +0.2% m/m. Finally, the number of Americans filing for initial jobless claims in the past week fell -2K to 231K, compared with 232K expected.
“The message of [Thursday’s] data is ‘steady as she goes’,” said Chris Larkin at E*Trade from Morgan Stanley. “Weekly jobless claims were slightly lower than last week and GDP was revised slightly higher. The economy doesn’t appear to be falling off a cliff, and in the current market, good news is good. There was nothing here to make the Fed rethink its plan to cut rates next month.”
Meanwhile, U.S. rate futures have priced in a 67.5% chance of a 25 basis point rate cut and a 32.5% chance of a 50 basis point rate cut at the next central bank meeting in September.
Today, all eyes are focused on the U.S. core personal consumption expenditures price index, the Fed’s preferred price gauge, set to be released in a couple of hours. Economists, on average, forecast that the core PCE price index will stand at +0.2% m/m and +2.7% y/y in July, compared to the previous figures of +0.2% m/m and +2.6% y/y.
Also, investors will focus on the U.S. Chicago PMI, which arrived at 45.3 in July. Economists foresee the August figure to be 45.0.
U.S. Personal Spending and Personal Income data will be closely monitored today. Economists forecast July Personal Spending to be at +0.5% m/m and July Personal Income to come in at +0.2% m/m, compared to the June numbers of +0.3% m/m and +0.2% m/m, respectively.
The U.S. Michigan Consumer Sentiment Index will be reported today as well. Economists estimate this figure to arrive at 67.8 in August, compared to 66.4 in July.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 3.853%, down -0.24%.

My bias for today is bullish. The market absorbed the NVDA results well. Onward and upward.

Trade docket for today: /MCL, CRWD, DELL, DIA, FSLR?, IWM, LULU, NVDA, PYPL, QQQ, SMCI, Just a stand alone SPX and NDX 0DTE today. We booked profits on our debit portion yesterday. We'll re-start those Monday.

Let's take a look at some intra-day levels:
​/ES: Coming into this session nicely balanced right at PoC. 5649 is first resistance then 5660. 5623 is first support then 5613.

/NQ; It continues to be weaker than the SP500. First resistance is at PoC at 19605 with 19696 next. 19557 is first support with 19476 next.

Let's have a strong finish to the week folks! Have a good weekend.