Market analysis for July 11th, 2024

Holy smokes!

We had a really nice day yesterday...I am frankly amazed. I truely have not see a day like this in the past five years of running this trading room. Low vol. and I.V. just absolutely in the tank! Credit trades have horrible risk/reward ratios right now. Fine. Let's flip to debit trades. That's not much easier. All our indicators are bullish. The market is bullish, but do you really want to go long here at this level? How about bearish? We certainly seem overstretched to the upside but...no real sell or reversal signals yet either. Tough, tough market. We get CPI this morning. Maybe that will juice the premiums a bit. Here's our results from yesterday. 

Federal Reserve Chair Jerome Powell told House lawmakers on Wednesday that he perceives inflation to be diminishing, though he remains uncertain whether price increases are sustainably slowing toward the Fed’s 2% target. Also, Powell stated the Fed doesn’t require inflation to drop below 2% before reducing rates, while noting that officials still have more work to do. In addition, the Fed chief remarked that the labor market has cooled “pretty significantly.”
“Markets remain remarkably calm despite the flood of data this week, including Fed Chair Powell’s testimony, CPI/PPI reports, and the beginning of earnings season,” said Mark Hackett at Nationwide. “This could be challenged by the CPI reading.”
Meanwhile, U.S. rate futures have priced in a 4.7% chance of a 25 basis point rate cut at the July FOMC meeting and a 68.1% probability of a 25 basis point rate cut at the September meeting.
Today, all eyes are focused on the U.S. consumer inflation report, set to be released in a couple of hours. Economists, on average, forecast that the U.S. June CPI will arrive at +0.1% m/m and +3.1% y/y, compared to the previous numbers of 0.0% m/m and +3.3% y/y.
The U.S. Core CPI data will also be closely watched today. Economists anticipate the Core CPI to be +0.2% m/m and +3.4% y/y in June, compared to the previous figures of +0.2% m/m and +3.4% y/y.
According to a survey by 22V Research, 55% of investors anticipate a “risk-on” market reaction to the CPI report, while 16% foresee a “risk-off” response, and 29% expect a “mixed/negligible” response.
U.S. Initial Jobless Claims data will be reported today as well. Economists estimate this figure to be 236K, compared to last week’s number of 238K.
In addition, market participants will be anticipating a speech from Atlanta Fed President Raphael Bostic.
On the earnings front, PepsiCo (PEP) and Delta Air Lines (DAL) are slated to report their Q2 earnings results today.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.277%, down -0.02%.

Pre-CPI release the technicals are all still bullish. 

I don't have any real directional bias this morning as CPI will likely be the catalyst that drives the price action today. 

All the major indicies look very bullish here. 

However, RSI is above 80 and we are pushing on the upper Bollinger band. We look overstreched. 

It's also interesting the most fund managers are pretty much "all in" at this point. That's bearish. 

It's also worth noting, the Hindenburg Omen triggered yesterday. Not aware of it? Google it!

I'm not looking at intra-day levels today as CPI should serve as the catalyst for the day.

Our trade docket for today is simply to book profits where we can. Free up some cash and focus on 0DTE's. This market simply isn't rewarding us for taking other risks.