Market analysis for Feb 20th, 2024

Welcome back traders! I hope everyone had a nice break. We are back at it once again! Last week was solid for us. My net liq was up $6,000 and a good portion of that was our scalping efforts. We'll be back in the live scalping room today if you want to join us. 

The last few trading days have flipped us back to bearish trends now:

We are looking at about a 1.1% expected move in the SPX this week with the shortened holiday trading sessions. 

Potential news catalysts for this week:
Tuesday 20th February
08:30 ET
Canadian CPI for January
The Canadian Consumer Price Index (CPI) is a measure of the average change over time in the prices paid by consumers for a basket of goods and services. It is one of the most widely used indicators for tracking inflation in Canada. The CPI is released monthly by Statistics Canada, the country’s national statistical agency. It covers a wide range of goods and services, including food, housing, transportation, clothing, and recreation, among others.
What to Expect
The Bank of Canada want CPI to continue ticking down to the target, therefore, any data on inflation coming in hotter than expected will most likely cause a positive reaction in the Canadian Dollar send it higher while Canadian stocks may take a hit.

Wednesday 21st February
14:00 ET
FOMC Meeting Minutes for the January 31st Meeting
The FOMC (Federal Open Market Committee) Meeting minutes provide comprehensive records of the discussions and decisions undertaken during the committee’s meetings, which are pivotal in determining U.S. monetary policy. These minutes detail deliberations on economic indicators such as inflation, employment, and overall economic growth, guiding the FOMC’s decisions on interest rates and other monetary policy tools. Released approximately three weeks following each meeting, the minutes offer insights into the perspectives of committee participants, including governors and Federal Reserve Bank presidents, outlining their assessments of economic conditions and the rationale behind any policy adjustments.
What to Expect
If the deliberations have hawkish undertones, or mention holding rates for longer than anticipated, this could result in Dollar strength and US stock weakness. On the other hand, talks on rate cuts may result in the inverse occurring. Any comments from Fed officials that contradict the current projections held by members and published in the SEP could also affect the markets.

Thursday 22nd February
08:30 ET
US Weekly Initial & Continued Jobless Claims
The US weekly initial jobless claims refer to the number of individuals who file for unemployment benefits for the first time during a given week. These claims are reported by the US Department of Labor and are considered a key indicator of the health of the labor market. A higher number of initial jobless claims indicates increased layoffs and potential economic distress, while a lower number suggests a healthier job market.
What to Expect
If Jobless Claims comes in noticeably above forecast, you could see US stocks strengthen and Dollar weaken as market participants view a potential softening labor market despite it being one week of data.
09:45 ET
US S&P Manufacturing & Services PMI February Prelim
The US S&P Manufacturing and Services Purchasing Managers’ Index are monthly indicators of economic health for the manufacturing and services sectors, respectively.
They are based on surveys of purchasing managers in these sectors and provide insights into business conditions, including new orders, production, employment, supplier deliveries, and inventories.
As a diffusion index, a PMI above 50 indicates expansion, while below 50 suggests contraction.
These indices are watched by economists, policymakers, and investors for gauging the overall health and direction of the US economy.
What to Expect
While manufacturing has been swinging between expansion and contraction for the last few months, market participants are looking to the Services sector, as Fed officials have noted that we need to see cooling in the services sector as it is acting as a potential headwind to disinflation.
A higher-than-expected read in these PMI reads could point toward the ‘higher for longer’ narrative, which would be likely to cause strength in the dollar and weakness in US stocks.
10:00 ET
US Existing Home Sales for January
US Existing Home Sales is a monthly report released by the National Association of Realtors that provides data on the sales of previously owned homes, excluding newly constructed ones.
It measures the number of completed transactions for single-family homes, townhomes, condominiums, and co-ops.
This data is an indicator of the health of the housing market and the overall economy, as it reflects consumer confidence, affordability, and the availability of mortgage financing.
What to Expect
Changes in existing home sales can impact various sectors, including real estate, construction, banking, and consumer spending.
Though unlikely to move the markets without a large deviation, it is a good measure of consumer sentiment, as a home is one of the largest investments that the average consumer will make.
Nonetheless, a higher-than-expected Existing Home Sales number could indicate that consumers are not phased by rising interest rates, creating upside inflation risks, which in theory, would be bullish for the dollar and bearish for US stocks.
10:30 ET
US Weekly EIA Crude Oil Inventories
The US Weekly EIA Crude Oil Inventories report provides data on the stockpile of crude oil held by US commercial firms over a specific week.
It is released every Wednesday by the Energy Information Administration and is monitored to gauge supply and demand dynamics in the oil market.
This report helps market participants assess the balance between supply and demand, which can impact trading decisions and energy policy considerations.
What to Expect
Changes in crude oil inventories can influence oil prices, as a buildup suggests oversupply or weakening demand, while a drawdown indicates the opposite.
​

The two big focuses for this shortened week will be FOMC mins. release on Weds. and NVDA's much anticipated earnings report, Weds. after the close. We are locked and loaded for both of those events.

We have /MCL, /ZN, DIA, GLD, IWM, MSTR, ORCL, PFE, SPX/NDX/Event contract 0DTE's all on the trade docket for today. 

San Francisco Fed President Mary Daly said Friday that the Federal Reserve should take its time before implementing interest rate cuts, citing the risks associated with the possibility that certain factors currently pushing down inflation could peter out or reverse. At the same time, she said an expectation of three rate cuts was a “reasonable baseline” for the monetary policy outlook this year. Also, Atlanta Fed President Raphael Bostic said he supports initiating rate cuts at some point this summer, but he indicated that more positive inflation data could warrant an earlier start. “A year ago, six months ago, I was in the fourth quarter. So, we’ve seen tremendous progress, and I’m hopeful that that continues. If that continues, I’ll be willing to pull it forward even further,” Bostic said in an interview on CNBC. In addition, Richmond Fed President Thomas Barkin stated that the latest inflation figures highlight why policymakers want to see more data before cutting interest rates.
Meanwhile, U.S. rate futures have priced in an 8.5% probability of a 25 basis point rate cut at the conclusion of the Fed’s March meeting and a 34.0% chance of a 25 basis point rate cut at the May FOMC meeting.

Fourth-quarter earnings season winds down, but several notable companies are due to report this week, including NVIDIA (NVDA), Walmart (WMT), Home Depot (HD), Palo Alto Networks (PANW), Medtronic (MDT), Analog Devices (ADI), Intuit (INTU), and Booking (BKNG).

It will be interesting to see if NVDA earnings and FOMC minutes can combine to acclerate this slight bearish action we are getting. The market is certainly trying to roll over here...if the bulls will let it. 

Intra day levels for me:
/ES: 5013/5023/5030/5041 to the upside. 4995/4982/4969/4962 to the downside.
/NQ: 17715/17790/17833/17905 to the upside. 17627/17612/17549/17488 to the downside.