Market analysis for July 5th, 2024

Good morning traders! Welcome back after the holiday. I hope everyone had a nice break from the action and are refreshed! We didn't make many trades and no 0DTE's on Weds. shortened session.

​Let's get into it and take a look at the markets.

Technicals are still holding on the buy signal. 

We've got the SPY and QQQ back to new ATH's. Is this the start of a new bull leg? Meanwhile the IWM and DIA continue to not participate. The IWM just can't seem to break above the 50DMA and the DIA is treading water.

Let's take a look at the news for today:
​September S&P 500 E-Mini futures (ESU24) are up +0.04%, and September Nasdaq 100 E-Mini futures (NQU24) are up +0.11% this morning as trading resumed after the Independence Day holiday, with market participants bracing for the all-important U.S. payrolls reading due later in the day.
The minutes of the Federal Open Market Committee’s June 11-12 meeting, released Wednesday, showed that officials didn’t deem it appropriate to lower borrowing costs “until additional information had emerged to give them greater confidence that inflation” is on track to their 2% goal. Officials pointed to inflation progress evidenced by smaller monthly gains in the core personal consumption expenditures price index and May consumer price data released hours before the rate decision. While “some” participants emphasized the need for patience, “several” officials highlighted that further weakening in demand could lead to a larger increase in unemployment. At the same time, the minutes showed that several policymakers remained ready to raise interest rates if inflation remained elevated. “Participants noted the uncertainty associated with the economic outlook and with how long it would be appropriate to maintain a restrictive policy stance,” according to the FOMC minutes.
In Wednesday’s holiday-shortened trading session, Wall Street’s main stock indexes ended mixed, with the benchmark S&P 500 and tech-heavy Nasdaq 100 notching new record highs. Paramount Global (PARA) surged nearly +7% and was the top percentage gainer on the S&P 500 after the Wall Street Journal reported that Skydance Media had reached a preliminary agreement to buy National Amusements and merge with Paramount. Also, Tesla (TSLA) climbed more than +6% and was the top percentage gainer on the Nasdaq 100 after Bank of America Global Research raised its price target on the stock to $260 from $220. In addition, chip stocks advanced following a sharp decline in bond yields, with Nvidia (NVDA) and Broadcom (AVGO) rising over +4%. On the bearish side, Simulations Plus (SLP) tumbled more than -14% after the company suspended its quarterly cash dividend and cut its full-year EPS guidance.
The ADP National Employment report on Wednesday showed private payrolls rose by 150K jobs in June, weaker than expectations of 163K. Also, the U.S. June ISM services index fell to 48.8, weaker than expectations of 52.6 and the steepest pace of contraction in 4 years. In addition, U.S. factory orders unexpectedly fell -0.5% m/m in May, weaker than expectations of +0.2% m/m. Finally, the number of Americans filing for initial jobless claims in the past week rose +4K to 238K, compared with 234K expected.
“With the ISM services falling to 48.8, the weakest since the pandemic and job claims deteriorating, ultimately the negative data is being seen as positive for markets,” said Justin Onuekwusi, chief investment officer at St James Place. “It feels like September is the date everyone is now looking at.”
Meanwhile, U.S. rate futures have priced in an 8.8% chance of a 25 basis point rate cut at the next FOMC meeting in July and a 68.1% chance of a 25 basis point rate cut at September’s policy meeting.
Today, all eyes are focused on U.S. Nonfarm Payrolls data, set to be released in a couple of hours. Economists, on average, forecast that June Nonfarm Payrolls will come in at 191K, compared to the previous value of 272K.
A survey conducted by 22V Research revealed varied expectations among investors regarding the market reaction to the jobs report, with 40% predicting a “negligible/mixed” response, 34% expecting “risk-on,” and 26% anticipating “risk-off.”
U.S. Average Hourly Earnings data will also be closely watched today. Economists expect June’s figures to be +0.3% m/m and +3.9% y/y, compared to the previous numbers of +0.4% m/m and +4.1% y/y.
The U.S. Unemployment Rate will be reported today as well. Economists foresee this figure to remain steady at 4.0% in June.
In addition, market participants will be looking toward a speech from New York Fed President John Williams.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.342%, down -0.05%.

I have to say, I'm surprised the markets are as strong as they are with FED members now starting to talk about the potential need for a rate HIKE!

My bias for today is bearish. My bias for Wed's shortened session was bearish as well. Guess what? I was wrong! NFP today will be what starts our trade flow off so really it could bullish or bearish today depending on what it looks like but I continue to believe that traders don't want to hold a lot of positions over the weekend. Next week, hopefully, we can get back to some normal volume.

A look at the VTI tells the tale of the market. Sitting at ATH's but no real trigger signal. Its very hard for me to go bullish or bearish here as we just don't have the signals...yet. One thing we know for sure, consolidation always leads to expansion. We will get directional movement. We just don't know when or in what direction. 

Trade docket for today: We've been light all week so its time to get back to putting our money to use.
/NG, /MCL, /ZN, DIA, FSLR, WYNN, UPST, ORCL, IWM, CCL, NVDA, PLTR, PYPL, SHOP, ODTE's.

Let's drill down on the price action levels for me today:
/ES: One level for the upside. That's 5600. If the market can break above, and hold 5600 that would be incredibly bullish and set the stage for a possible new bullish leg up. 5573 is the first downside target then 5560 and 5535 which is PoC. If we can break below 5535 that would be very bearish price action.

/NQ: 20460 is THE key level for me to the upside. If we can break through that level it would be very bullish. 20382 is the first support level then 20295 and finally 20254. This level is key. If we can break below 20254 I believe we could get some decent downside price action.

Bitcoin: Wow! I wasn't following the price action too much yesterday with the day off but I was blown away when I did! That's a big hit the to crypto markets. You can see on the 2hr. chart that once it lost it's PoC (purple line) is went into free fall. 61,000 down to 55,000. The question now is where is support and when will the bottom be put in?

My levels for today on BTC:  60588 is now resistance and 52422 is support. This support level goes back to Feb. of this year. It's a substantial one. If that doesn't hold then all bets are off as to how big the downside is. 

Have a great day folks and a nice, safe weekend coming up!