Market analysis for July 10th, 2024

Welcome to midweek!. We had a decent day yesterday. It would be nice if I could catch a trend runner in my scalping efforts but today is another day. We have a small long call position on the QQQ's that we carried over from yesterday which looks good pre-market. 

We got a jump on our ETH and BTC crypto 0DTE's last night with some pretty nice setups that look to cash flow for us today. Speaking of crypto, something to keep an eye on is the rainbow chart analysis. Here's an overview for you; 
There has been no small amount of uncertainty surrounding Bitcoin (BTC) for approximately a month. After a significant climb in the initial months of 2024 and a new all-time high (ATH) just above $73,000 in March, the world’s premier cryptocurrency found itself in a strong downtrend in June and early July.
While the decline is widely considered to be at least partially driven by a convergence of events – including the German government’s plans to offload seized BTC and the long-awaited repayments by the collapsed crypto exchange Mt. Gox – the fact that Bitcoin has crashed through multiple support zones has left many investors wary.
Though BTC remains 32.44% in the green in the year-to-date (YTD) chart, it has fallen nearly 20% in the last 30 days of trading and is 23.09% below its yearly – and all-time – highs. 

By July 8, the cryptocurrency appears to have settled in the range between just below $54,500 and just above $56,000 – levels not seen since February – with little certainty about whether the next move will take it higher or lower. Bitcoin price today, at press time, stands at $56,147.

BTC YTD price chart. Source: FInboldIn this climate of fear and uncertainty, the Bitcoin Rainbow Chart – a tool that utilizes a logarithmic growth curve and describes investor sentiment at various price levels – can offer valuable insights into what the coin’s next move in the crypto market may be.
The 2024 Bitcoin Rainbow chartThe Bitcoin Rainbow Chart is divided into nine color-coded zones, each representing a certain price range and the associated market sentiment. These range from ‘Bitcoin is dead’ – lows that indicate that severe bearish sentiment prevails – to ‘Maximum Bubble Territory’ – highs that are so high that the cryptocurrency’s price is likely to plummet.
According to the chart, the recent downtrend brought Bitcoin to the border between ‘Accumulate’ – levels that indicate it is a good time to purchase more of the coin – and ‘Still cheap’ – another zone predicted to be well below BTC’s forthcoming highs.

Bitcoin Rainbow chart predicts Bitcoin ranges for end of 2024In addition to presenting Bitcoin’s historical performance and placing it in a market sentiment context, the Rainbow Chart also offers some insights into the likely future prices of the world’s premier cryptocurrency.
According to the tool, should BTC find itself below $37,417.75 in late December, it would mean that the current bull cycle is likely at an end and that the winds of the crypto winter are again blowing strong. 
On the other hand, trading above $186,667.72 would hint that Bitcoin has become a bubble, while sustained closes above $244,473.74 would all but guarantee it, meaning that a major correction is almost certainly imminent.

Bitcoin Rainbow chart zones for late 2024. Source: BlockhainCenterEslewhere, the Rainbow chart indicates that BTC would be the most stable at the end of 2024 if it remains between $85,730.33 and $112,983.27 – the ‘HODL’ range – and relatively stable, though investors would do well to keep a lookout for the range between $112,983.27 and $144,774.1 – the ‘Is this a bubble?’ range.
Finally, the tool strongly suggests that an investor would be right to buy Bitcoin near the end of 2024 if it trades in the zone between $50,768.84 and $65,962.8 as it marks the area as ‘Accumulate’ though prices up to $85,730.33 would still be considered relatively cheap.
​In prepared remarks for a Senate hearing Tuesday, Fed Chair Jerome Powell said that “more good data” would bolster confidence that inflation is moving down toward the Fed’s 2% target, noting that recent readings indicate “modest further progress” on prices. Also, Powell remarked that lowering rates too soon or too much could harm inflation progress. In addition, the Fed chief described the labor market as “strong, but not overheated” and noted that the central bank’s restrictive stance is effectively balancing supply and demand.
“Powell keeps the ship steady. Chair Powell’s prepared testimony struck a balanced tone,” said Peter Williams at 22V Research. “September remains modal, if notably more tentative than priced currently. But with the Fed balancing risks, upside surprises to labor market or inflation data could delay the first cut.”
U.S. rate futures have priced in a 4.7% chance of a 25 basis point rate cut at the next central bank meeting in July and a 70.0% chance of a 25 basis point rate cut at September’s policy meeting.
Today, investors will closely monitor Federal Reserve Chair Jerome Powell’s semi-annual monetary policy testimony before the House Financial Services Committee.
Also, market participants will be looking toward speeches from Chicago Fed President Austan Goolsbee, Fed Governor Michelle Bowman, and Fed Governor Lisa Cook.
On the economic data front, investors will likely focus on U.S. Crude Oil Inventories data, set to be released in a couple of hours. Economists estimate this figure to be 0.700M, compared to last week’s value of -12.157M.
U.S. Wholesale Inventories data will be reported today as well. Economists expect May’s figure to be +0.6% m/m, compared to +0.1% m/m in April.
Meanwhile, the focus remains on the June reading of the U.S. Consumer Price Index, scheduled for release on Thursday, which is expected to show a decline in inflation to +3.1% y/y from +3.3% y/y in May.
Second-quarter corporate earnings season begins in earnest on Friday, with major banks such as JPMorgan Chase (JPM), Wells Fargo (WFC), and Citigroup (C) set to report their quarterly results.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.286%, down -0.28%.

Markets remain bullish. 

I know I seem like a broken record, repeating myself daily but...this divergence in the market is not a bullish indicator of things to come. 

Add to the the fact that $SPY Today was the lowest volume day since Dec. 24th 2019 (half day before Christmas). $SPY Today was the lowest volume day for a full day ever? Crazy. 
SPX 30 day realized volatility making new 4-year low of 5.7%. So the VRP, the implied realized volatility spread, is 4.5% (96th percentile).

​The VIX1D is in the tank! This is not a favorable enviroment for option sellers. We are 50% off where I.V. should be for optimal selling setups! 50%!!!!! I honestly can't remember the last time I've seen this.

For us, as option sellers it simply means we trade smaller and get more selective in the trades we do take.

Trade docket for today; FSLR, LEVI, NVDA, ORCL, TSLA, 0DTE's 

My lean for today is slightly bullish. 

Intra-day levels for me:
/ES; 5645/5650/5657/5668 to the upside. 5639/5635/5628/5622 to the downside. Note; Tight consolidation ranges like this always happen prior to a big expansion.

/NQ; 20774/20833/20846 to the upside. 20679/20621/20520 to the downside.

Bitcoin; 59,745/60,602 are resistance levels. 57,772/57,201 are support. We've had five days now of slightly bullish price action. The German government still has some more planned selling to do but we may be seeing signs of selling abating. 

Let's have a great day folks. If you're an option seller be cautious. I'm looking to more asymmetric setups. Chicken Iron condors, Broken wing butterflies, Iron butterflies etc.