Market analysis for July 15th, 2024

Welcome back to the new week traders! The last few days have served notice, once again, that if you don’t like what’s happening just wait. It will change. Thurs. and Fri. saw us finally getting some movement in the market. The weekend say the assassination attempt against former Pres. Trump. It servers notice that we should always expect the unexpected. It’s also my wish that we, as human beings, may unite in the sanctity of life. Our ability to peacefully disagree is something we should all strive for. My heart goes out to the innocents that were wounded and killed.

Let's take a look at where we are in the markets to start off the week. Technicals have swung us back into bullish mode.

​September S&P 500 E-Mini futures (ESU24) are up +0.39%, and September Nasdaq 100 E-Mini futures (NQU24) are up +0.52% this morning as investors increased their bets on Donald Trump winning the U.S. presidential election following an assassination attempt, with the focus shifting to Wall Street’s earnings season, key economic data releases, as well as comments from Federal Reserve Chair Jerome Powell and other Fed officials.
Donald Trump was shot in the ear during a Saturday campaign rally, an attack that left the Republican presidential candidate’s face streaked with blood. His security agents swiftly surrounded him, but he soon emerged, pumping his fist in the air and mouthing the words “Fight! Fight! Fight!” The Republican National Convention begins on Monday and continues through Thursday when presidential candidate Donald Trump will give remarks, marking his first public appearance since the attempted assassination. The dollar rose while longer-maturity bonds fell on Monday as investors anticipated that Trump’s return to the White House would lead to relaxed fiscal policy and increased trade tariffs.
In Friday’s trading session, Wall Street’s major averages ended in the green, with the benchmark S&P 500 and blue-chip Dow notching new record highs. Bank of New York Mellon (BK) climbed over +5% after reporting better-than-expected Q2 net interest income. Also, chip stocks gained ground, with ARM Holdings (ARM) rising more than +4% to lead gainers in the Nasdaq 100 and Intel (INTC) advancing nearly +3% to lead gainers in the Dow. In addition, Carvana (CVNA) closed up over +4% after BTIG initiated coverage of the stock with a Buy rating and a $155 price target. On the bearish side, Wells Fargo (WFC) slumped about -6% and was the top percentage loser on the S&P 500 as the lender’s Q2 results were impacted by higher-than-expected costs.
Economic data on Friday showed the U.S. June producer price index for final demand rose +0.2% m/m and +2.6% y/y, stronger than expectations of +0.1% m/m and +2.3% y/y. Also, the U.S. core PPI, which excludes food and energy, increased +3.0% y/y in June, higher than the +2.5% y/y consensus and accelerating from the +2.6% y/y pace in May (revised from +2.3% y/y). However, categories used in calculating the Fed’s preferred inflation measure, the core personal consumption expenditures price index, were not so dire. Finally, the University of Michigan’s U.S. consumer sentiment index unexpectedly fell to an 8-month low of 66.0 in July, weaker than expectations of 68.5. At the same time, the University of Michigan’s July year-ahead inflation expectations eased to 2.9% from 3.0% in June, in line with expectations, while 5-year implied inflation expectations eased to 2.9%, better than expectations of no change at 3.0%.
“We continue to expect the Fed to join the global rate-cutting cycle in September, with 50 basis points of easing this year,” said Mark Haefele at UBS Global Wealth Management.
U.S. rate futures have priced in a 4.7% probability of a 25 basis point rate cut at the Fed’s monetary policy committee meeting later this month and a 91.7% chance of a 25 basis point rate cut at September’s policy meeting.
Earnings season picks up steam this week, with results expected from several more big banks, including Goldman Sachs (GS), Bank of America (BAC), and Morgan Stanley (MS). Also, notable companies, including Netflix (NFLX), UnitedHealth (UNH), Johnson & Johnson (JNJ), Blackrock (BLK), Progressive (PGR), Kinder Morgan (KMI), Alcoa (AA), U.S. Bancorp (USB), United Airlines (UAL), Ally Financial (ALLY), Abbott Laboratories (ABT), Domino’s Pizza (DPZ), Schlumberger (SLB), American Express (AXP), Halliburton (HAL), and Travelers (TRV), are slated to post quarterly updates this week.
In addition, investors will be monitoring a spate of economic data releases this week, including U.S. Retail Sales, Core Retail Sales, Export Price Index, Import Price Index, Business Inventories, Building Permits (preliminary), Housing Starts, Industrial Production, Manufacturing Production, Crude Oil Inventories, Initial Jobless Claims, Philadelphia Fed Manufacturing Index, and Leading Index.
Meanwhile, Fed Chair Jerome Powell is scheduled to participate in an interview hosted by the Economic Club of Washington later in the day. A host of other Fed officials will also be making appearances throughout the week, including Daly, Kugler, Barkin, Waller, Logan, Bowman, Williams, and Bostic.
Today, investors will likely focus on the U.S. NY Empire State manufacturing index, set to be released in a couple of hours. Economists, on average, forecast that the July NY Empire State manufacturing index will arrive at -5.50, compared to the previous value of -6.00.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.206%, up +0.50%.

The attempt on Trump is political but it also affects markets. The dollar. The indices and, of course, DJT. We hold a short position in that which we've been cash flowing. It looks to hurt us today with this massive shift in opinion. It will be interesting to see if this shift in public opinion will look into the election.

Finally! We've been talking about the lagging indices, namely the IWM and DIA. They aren't lagging anymore. The Dow has now found some legs and the IWM has woken up! After a few months of outflows, there is now a focused inflow of captial into the Small caps.
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Let's take a look at I.V. and the expected moves for the week. For all the movement we've had over the last three trading sessions, our I.V. is still in the tank. It looks like, only a decisive downward move will help this.

That rotation was pretty clear on Fridays session. 

Market internals are pretty strong. 

Friday's performance was strong in all sectors with weakness only showing up in META and some reporting bank stocks.

My bias and lean today is bullish. The order flow is pretty heavily slanted that way. 

Trade docket for today: We'll start with five 0DTE's today. An SPX stand alone. We already have a call side started there.  An NDX "debit type" which will build on our already existing bullish BWB. An Event contract NDX, BTC and ETH. We'll also restart all our ladder trades today with Oil, Bonds, DIA and Gold. I'll hold off until tomorrow for our other weekly standard setups to see if we can get some more I.V. into the option pricing. 

Intra-day levels for me:
/ES; Futures came alive on Friday and are continuing this morning. There are a couple key levels for me today. 
5688, which is right were we are as I type is a key level. It puts us right back to ATH's and more importantly, right back to the level that we rose to on Friday before retracing. 5707 is a key level for bulls. A break above that and its all bullish. Below 5654 and we may be able to start a retrace lower.

/NQ; 20627 (right where we are at as I type) is a critical PoC level. 20740 is the first resistance then comes 20939. Above that we are back to marking ATH's. 20487 is the first support level and then 20391.

Bitcoin: Guess what woke up with the Trump shooting? BTC! A $5,0000+ dollar move to the upside. Resistance is now 64,226 with support at 61,855. It will be interesting to see what type of trade we can find here today.

Let's have a great week folks!