Market analysis for Jun 17th, 2024

6/17/2024

Good morning traders! Welcome back to a shortened trading week with June19th off. We finished off the week strong with solid 0DTE results once again.
Let's look at the markets as we start off the trading today:
Buy signals are still holding:

We start the week with the same divergence as last with the IWM and DIA still down below their 50DMA and the SPY and QQQ sitting near ATH's.

After a powerful gap-up on Wednesday, the SPY stayed strong into the weekend, holding the gap and closing at $542.78 (+1.64%). The price now sits right below the 1.618 golden Fibonacci extension from the March highs, a key level to gain for a continuation move in the weeks to come.

The QQQ was in a league of its own this week, closing well above the 1.618 golden Fibonacci extension at $479.19 (+3.51%). With AAPL leading the charge off the heels of its blockbuster WWDC event, this index is now showing its highest RSI reading since December 2023.

IWM continued their doldrums this week, filling Wednesday’s gap up and closing nearly at the lows of the week at $198.73 (-1.22%). On Friday, the price also failed below the year-to-date anchored VWAP, which means the average buyer in 2024 is now underwater. If previous losses of this level are any indication, we could be stuck below it for a few weeks.

Expected moves for the week:

Trade docket for today:
/ZN, CCL, DELL< DIA, NVDA, PFE, 0DTE's, SPY/QQQ 4DTE

Economic data on Friday showed that the University of Michigan’s U.S. consumer sentiment index unexpectedly fell to a 7-month low of 65.6 in June, weaker than expectations of 72.1. Also, the University of Michigan’s June year-ahead inflation expectations were unchanged from May at 3.3%, above expectations of a decline to 3.2%, while 5-year implied inflation expectations rose to a 7-month high of 3.1%, higher than expectations of no change at 3.0%. At the same time, the U.S. import and export price indexes for May unexpectedly fell to -0.4% m/m and -0.6% m/m, respectively.
“[Friday’s] softer-than-expected reading puts consumer sentiment at roughly the midpoint of where it has been over the past two years. The growth in prices may be coming down, but prices are not and that is weighing on households, particularly those in the middle most apt to feel the squeeze,” Wells Fargo’s Tim Quinlan said.
Cleveland Fed President Loretta Mester stated Friday that she continues to view inflation risks as tilted to the upside despite the latest softer-than-expected inflation figures. The Cleveland Fed chief also said that the median projection of policymakers’ latest forecasts, which indicated only one interest-rate cut this year, aligns closely with her own outlook for the economy. Also, Minneapolis Fed President Neel Kashkari said Sunday that the central bank can take its time and monitor incoming data before initiating interest rate cuts. “We need to see more evidence to convince us that inflation is well on our way back down to 2%,” Kashkari said on CBS’s Face the Nation.
U.S. rate futures have priced in an 11.4% chance of a 25 basis point rate cut at the next central bank meeting in July and a 60.0% chance of a 25 basis point rate cut at the September FOMC meeting.
In other news, Goldman Sachs strategists raised their year-end target for the S&P 500 index to 5,600 from 5,200 on Friday, citing “milder-than-average negative earnings revisions and a higher fair value P/E multiple.”
In the coming week, investors will be monitoring a spate of economic data releases, including U.S. Retail Sales, Core Retail Sales, Industrial Production, Manufacturing Production, Business Inventories, Philadelphia Fed Manufacturing Index, Building Permits (preliminary), Housing Starts, Current Account, Initial Jobless Claims, Crude Oil Inventories, S&P Global Composite PMI (preliminary), S&P Global Manufacturing PMI (preliminary), S&P Global Services PMI (preliminary), Existing Home Sales, and Leading Index.
In addition, a slew of Fed officials will be making appearances throughout the week, including Williams, Harker, Cook, Barkin, Logan, Kugler, Kashkari, Daly, and Goolsbee.
Meanwhile, the U.S. stock markets will be closed on Wednesday for observance of the Juneteenth National Independence Day federal holiday.

My market bias for today is neutral. With the SPY/QQQ sitting at ATH's and the IWM/DIA lagging below their 50DMA we'll need a catalyst of some sort to get more movement.