Market analysis for July 8th, 2024

Good morning traders! Welcome back to a full week of trading action. I hope everyone had a nice 4th and a great weekend. It's time to get back to the action. 
Markets are still flashing buy. I took a bearish stance on both Weds. and Fri. and I was wrong! 

Technicals continue to point up.

We cleared some pretty important resistance zones on the SPY and QQQ Friday. The IWM and DIA continue to languish. 
The U.S. Labor Department’s report on Friday showed that nonfarm payrolls rose by 206K jobs last month, surpassing the 191K consensus but at a slower pace than the 218K recorded in May, which was revised down from 272K. Also, the U.S. June unemployment rate unexpectedly rose to a 2-1/2 year high of 4.1%, weaker than expectations of no change at 4.0%. In addition, U.S. average hourly earnings came in at +0.3% m/m and +3.9% y/y in June, in line with expectations.
“Get on with it. [Friday’s] employment report ought to firm up expectations of a September rate cut. Economic conditions are cooling and that makes the trade-offs different for the Fed,” said Neil Dutta at Renaissance Macro Research. 
Meanwhile, New York Fed President John Williams said Friday that although inflation has recently moderated toward the central bank’s 2% target, policymakers are still some way off from reaching their goal. “Inflation is now around 2-1/2%, so we have seen significant progress in bringing it down. But we still have a way to go to reach our 2% target on a sustained basis,” Williams said. “We are committed to getting the job done.”
U.S. rate futures have priced in a 6.7% chance of a 25 basis point rate cut at the Fed’s monetary policy committee meeting later this month and a 69.0% probability of a 25 basis point rate cut at the September FOMC meeting.
Second-quarter earnings season kicks off this week, with big banks such as JPMorgan Chase (JPM), Wells Fargo (WFC), and Citigroup (C) set to release their earnings reports on Friday. PepsiCo (PEP) and Delta Air Lines (DAL) are among other major names scheduled to deliver quarterly updates during the week.
On the economic data front, the U.S. consumer inflation report for June will be the main highlight. Also, market participants will be monitoring other economic data releases this week, including the U.S. Core CPI, PPI, Core PPI, Crude Oil Inventories, Wholesale Inventories, Initial Jobless Claims, and Michigan Consumer Sentiment Index (preliminary).
In addition, investors will focus on Fed Chair Jerome Powell’s semi-annual monetary policy testimony on Capitol Hill. Mr. Powell will testify before the Senate Banking Committee on Tuesday and the House Financial Services Committee on Wednesday. Powell is expected to tell lawmakers that Fed officials need more evidence of slowing inflation before considering interest rate cuts, despite mounting evidence of softer growth and employment. Fed Vice Chair for Supervision Michael S. Barr, Fed Governor Michelle Bowman, Chicago Fed President Austan Goolsbee, Fed Governor Lisa Cook, and Atlanta Fed President Raphael Bostic are also scheduled to speak this week.
Today, investors will likely focus on U.S. Consumer Credit data. Economists, on average, forecast that May Consumer Credit will stand at $10.70B, compared to the previous value of $6.40B.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.310%, up +0.86%.
Let's take a look at the expected moves for this week in the SPY/QQQ.

Not much difference than last week. We continue to be about 20%-30% lower on I.V. than we would like.

The 1 day VIX reading continues to sit in the basement. This likely means more debit trades for us this week.

My lean is bullish today. Its hard to be anything but with the substantive resistance levels that were broken on Friday. 

Our trade docket for today. /MNQ?, /ZC, /ZN, /MCL, DELL?, DIA, FSLR, NVDA, ORCL, CCL?, WYNN, ODTE's, SPY/QQQ 4DTE, Scalping

The fear and greed index is also close to neutral. No clear reading here. 

One quick note for the upcoming trading sessions. This Thursday, after the close we're headed up to our cabin at East Canyon until Monday evening. I'll be trading with you in the live trading room on Friday and Monday but no zooms as the connection is weak there. Also no scalping for me on those two days. 

Intra-day levels for me:
/ES; I have two key support/resistance levels today. 5627 is the first important resistance level. The next is 5631. If both those clear and hold its more bullishness (IMHO). Likewise, 5616 and 5610 to the downside. If we can retrace back below those two levels and hold then we might get a setup for some downside action.

/NQ; Same situation for the Nasdaq. 20637 and 20689 are the next resistance levels. If we can break above those the bullishness should continue. Below 20579 and 20537 we could get a retrace.

Bitcoin; Mt. Gox payments are set to start getting disbursed. This means a lot of potential liquidation is coming. I do think after this we start to see a bottom. Heavens knows BTC has been beat up a lot lately. 

54,592 is the current key support level. We've formed a double bottom there. 58519 is current resistance.

One last push on my bearish concerns. 

• The cost of an Independence Day cookout hit a record high of $71.22 for 10 guests.
• The June US jobs report shows a nonfarm payroll growth slowing to 1.4% annualized and unemployment rising to 4.1%.
• Brazil's real performed the worst among EM currencies, down 7% last month.
• US manufacturing contracted for a third straight month in June as demand remained subdued.
• US interest costs on the national debt will soon reach an all-time high, projected to total $12.9 trillion over the next decade.
• California's gas tax increased to 60 cents per gallon on July 1, 2024, making it the highest in the nation.
• Deepfakes will soon be undetectable to the average person, leaving them more susceptible to deepfake scams.
• Inflation in Russia has gone far above the 4% target rate, despite rapid GDP growth and low unemployment.

Market internals continue to break down while the index itself continues to charge higher. This never lasts. At some point the overall internals will rise which could trigger a massive upside or, the techs that are driving the index higher reverse and fall in line with the overall market, in which case we could get a decent sized pullback.

Be picky this week with your credit trades folks You're not getting paid very well for them.