Market analysis for July 25th, 2024

Welcome back traders! Well...how was your day yesterday? Those were some big, substantivie moves. It's been a long time since the SP500 took a 2%+ move. The SPY is also having a rotation problem. The largest fund to track the key stock market benchmark, the SPDR S&P 500 Trust ETF (SPY), is losing to 10 major market segments over the past month.
What do all the recent market leaders have in common? They have little to zero exposure to the mega-cap tech stocks known as the Magnificent 7.
Since July 1, the Mag 7 have collectively declined by more than 12%, as measured by the Roundhill Magnificent Seven ETF (MAGS).
The Mag 7 stocks comprise roughly one-third of the cap-weighted S&P 500 index, which until this month had outperformed most of the market segments that are now beating it.
The greatest example of the turn in market performance is the iShares Russell 2000 ETF (IWM), which is up nearly 8% in the past month, compared to SPY’s 0.8% decline.
Other market segments that are outperforming the S&P 500 include midcap and value stocks, a range of sectors including real estate, consumer discretionary, and financials, as well as commodities and alternative assets like gold and bitcoin.
Let's take a look at my results from yesterday.

We had to roll so many of our puts yesterday that we won't really see the true results of our day until the close of todays market. 
There are a lot of warning signs out there.

No surprise. Technicals are in full sell mode.

Futures are down again this morning as I type. 

And volatility is spiking. I.V. is certainly not a problem now for option sellers.

The motto may be, "Be careful what you wish for." We've (I) have been complaining about low I.V. for what seems like ages. That's not a problem today!

​The real impact of yestedays selloff is still unkown. If you look at the four major indices we trade all it's done is bring us back to previous resistance levels that are now, of course, support.

The question that needs to be answered is, does it hold? If we lose these new support levels it certainly looks like we not only have downside ahead but plenty of it! The NDX looks to have approx. 1,000 points of downside to it's PoC (Point of control purple line)

The SPX has close to 400 points of potential downside before we hit PoC.

It's a big day for economic news. Jobless claims, Durable goods and GDP all hit this morning. 
​In yesterday’s trading session, Wall Street’s major indices ended lower, with the tech-heavy Nasdaq 100 suffering its largest single-day percentage drop since October 2022. Tesla (TSLA) plunged over -12% and was the top percentage loser on the Nasdaq 100 after the electric vehicle giant reported weaker-than-expected Q2 adjusted EPS and postponed its Robotaxi event to October. Also, Alphabet (GOOGL) slumped more than -5% after the Google parent reported higher-than-expected Q2 capital spending, and its chief indicated that patience would be required to see concrete results from artificial intelligence investments. In addition, Lamb Weston (LW) plummeted over -28% and was the top percentage loser on the S&P 500 after reporting downbeat Q4 results and providing below-consensus FY25 guidance. On the bullish side, Enphase Energy (ENPH) surged more than +12% and was the top percentage gainer on the S&P 500 after the company reported strong Q3 bookings. Also, AT&T (T) rose over +5% after the telecommunications company reported better-than-expected wireless subscriber additions in Q2.
“The market is not impressed with the start of earnings season for the mega tech stocks,” said Kathleen Brooks, research director at XTB. “There was a lot resting on these results and we don’t think that they give clear answers to questions about the effectiveness and profit potential for AI right now.”
Economic data on Wednesday showed that the U.S. S&P Global manufacturing PMI unexpectedly fell to 49.5 in July, weaker than expectations of 51.7. Also, U.S. June new home sales unexpectedly fell -0.6% m/m to 617K, weaker than expectations of 639K. At the same time, the U.S. S&P Global services PMI rose to 56.0 in July, stronger than expectations of 54.7.
Meanwhile, U.S. rate futures have priced in a 10.9% chance of a 25 basis point rate cut at next week’s monetary policy meeting and a 98.7% probability of at least a 25 basis point rate cut at September’s policy meeting.
On the earnings front, notable companies such as AbbVie (ABBV), Union Pacific (UNP), Northrop Grumman (NOC), Rtx Corp. (RTX), Honeywell (HON), Keurig Dr Pepper (KDP), Deckers Outdoor (DECK), and Southwest Airlines (LUV) are slated to release their quarterly results today.
On the economic data front, all eyes are focused on the first estimate of U.S. second-quarter gross domestic product, due later in the day. Economists, on average, forecast that U.S. GDP will stand at +2.0% q/q in the second quarter, compared to the first-quarter figure of +1.4% q/q.
Also, investors will focus on U.S. Durable Goods Orders data, which came in at +0.1% m/m in May. Economists foresee the June figure to be +0.3% m/m.
U.S. Core Durable Goods Orders data will be reported today. Economists foresee this figure to come in at +0.2% m/m in June, compared to the previous number of -0.1% m/m.
U.S. Initial Jobless Claims data will come in today as well. Economists estimate this figure to be 237K, compared to last week’s value of 243K.

My bias or lean today is nothing! I was clearly wrong yesterday. I thought we would get a little bounce. It was nothing but straight down all day. With yesterdays move and all the news catalysts coming this morning I'm just going to react to what the market gives us. No intra-day levels for me. Let's just let the day play out and be patient with our entries.

Trade docket for today: /MCL, /MNQ, /ZN, /NG, CMG, CRWD, DELL, DIA, DJT, F, IWM, LUV, LVS, NVDA, QQQ/SPY, UPST, CMG? DLR, JNPR, BMY. 

Be patient today and trade small. Stay safe. Nothing wrong with simple preservaton in times like this and remember...cash is a position.