Market analysis for July 2nd, 2024

Welcome back! We had a decent day yesterday. This is what I consider to be one of the toughest weeks of the year to trade. When I was on Wall Street it was the week that most traders took off. With Weds. being a half day and Thurs. having the market closed, most traders would take Friday off as well. If you hone in on the volume of the SPY you'll see it's about as low as it's been all year.

I.V. is off. Volume is down at 67% of avg.. Shortened week. We do have NFP on Friday which may give us some action but otherwise it's generally not a great week for traders. Here's our results from yesterday.

We did book a profit early this morning on our Theta fairy of $392 dollars for the two day hold. Almost double what we look to make. This is one area that seems to be working for us.

​Lets take a look at the markets. Mostly weakness yesterday with the poor IWM slipping back below the 50DMA.

Futures this morning are indicating a slight sell signal. 

This Friday’s nonfarm payrolls report is expected to be a “goldilocks” report, with 200,000 jobs created and a steady 4% unemployment rate.
But even a minor deviation from the consensus could be noteworthy. This year, headline payroll gains have been solid, with an average monthly increase of 255,000 jobs.
Yet, in that same time, the unemployment rate has risen from 3.7% to 4%. It’s up even more from its post-Covid low point of 3.4% reached in January and April of 2023.
The nonfarm payrolls data and the unemployment rate come from two separate government surveys—the payroll survey and the household survey, respectively.
While the payroll survey has been showing strong job gains this year, the household survey hasn’t. No jobs have been added this year based on the household survey, compared to 1.5 million for the payroll survey.
Divergences in the two sets of data aren’t unusual, and the Bureau of Labor Statistics lays out several reasons why it happens, from sampling error to benchmark revisions to “off-the-books” employment.
In general, investors tend to favor the nonfarm payrolls report when gauging the health of the U.S. jobs market.

Economic data on Monday showed that the U.S. ISM manufacturing index unexpectedly fell to a 4-month low of 48.5 in June, weaker than expectations of an increase to 49.2. Also, the U.S. June ISM price paid sub-index fell to a 6-month low of 52.1, weaker than expectations of 55.8. In addition, U.S. construction spending unexpectedly fell -0.1% m/m in May, weaker than expectations of +0.3% m/m. At the same time, the U.S. June S&P Global manufacturing PMI increased to 51.6, falling slightly short of the 51.7 expected level.
“While manufacturing is contracting, the rest of the economy is in decent shape ... the Fed wants the economy to keep running in low gear near-term. They will see ongoing softness in manufacturing as contributing to their goal of less inflation,” said Bill Adams, chief economist at Comerica Bank.
Meanwhile, Fed Chair Jerome Powell is scheduled to participate in a policy panel discussion with European Central Bank President Christine Lagarde at the ECB’s annual forum in Sintra, Portugal, later today, with investors eagerly awaiting to see if he will offer any new insights on interest rates.
U.S. rate futures have priced in an 8.8% chance of a 25 basis point rate cut at July’s monetary policy meeting and a 59.9% probability of a 25 basis point rate cut at the conclusion of the Fed’s September meeting.
On the economic data front, all eyes are focused on the U.S. JOLTs Job Openings data, set to be released in a couple of hours. Economists, on average, forecast that the May JOLTs Job Openings will come in at 7.960M, compared to the previous figure of 8.059M.

My lean today continues to be bearish to slightly neutral. Look for lots of chop this week.

Intra-day levels for me:
​/ES; 5512/5525/5529 (PoC)/5539 to the upside. 5504/5496/5483/5474 to the downside.

/NQ: 20012/20072/20117/20150 to the upside. 19913/19868/19814/19753 to the downside.

BTC; There's been some sustained sellling for the last week and a half. The last couple days seems to be forming a bottom. It's doubtful crypto can make a bit upward push without the help of the equity markets. The correlation is too high but it's certainly trying. 65804 resistance. 60646 support.

Our trade docket for today is short. We'll focus most of our energy on Friday's trading session. /MCL, /ZN, /NG and all seven 0DTE's/ Scalping/Theta fairy.

Have a safe day out there. Remember to let the trades come to you. If it's not there (and it may not be this week) don't force it.  Sitting on your hands is a skillset and knowing when not to trade is an important discipline.