Market analysis for Jun 20th, 2024

6/20/2024

Welcome back traders! I hope everyone had a nice break yesterday. It feels a little strange to have a mid-week break but I got some stuff done so it was useful. Our trading on Tues. went well.

Although I continue to lag in my scalping results.

Let's take a look at the markets:
In Tuesday’s trading session, Wall Street’s main stock indexes closed higher, with the benchmark S&P 500 posting a new all-time high. Nvidia (NVDA) gained over +3% after Rosenblatt Securities raised its price target on the stock to $200 from $140. Also, Micron Technology (MU) advanced more than +3% after Bank of America added the stock to its “U.S. 1 List.” In addition, Silk Road Medical (SILK) surged over +24% after Boston Scientific entered into a definitive agreement to acquire the company for about $1.16 billion, or $27.50 a share. On the bearish side, Lennar Corporation (LEN) slumped about -5% after the homebuilder provided weaker-than-expected Q3 new orders and home deliveries guidance.
Economic data on Tuesday showed that U.S. retail sales edged up +0.1% m/m in May, weaker than expectations of +0.3% m/m, while April’s reading of unchanged m/m was revised downward to -0.2% m/m. Also, U.S. May core retail sales unexpectedly fell -0.1% m/m, weaker than expectations of +0.2% m/m. At the same time, U.S. industrial production climbed +0.9% m/m in May, stronger than expectations of +0.3% m/m. In addition, U.S. May manufacturing production advanced +0.9% m/m, stronger than expectations of +0.3% m/m.
New York Fed President John Williams stated on Tuesday that the U.S. economy is “moving in the right direction” but stressed that decisions on the timing or extent of policy easing this year would hinge on incoming economic data. Also, Fed Governor Adriana Kugler indicated it would likely be suitable for the central bank to reduce rates “sometime later this year” if economic conditions evolve as she expects. In addition, Dallas Fed President Lorie Logan said, “From a monetary policy perspective, we’re in a good position; we’re in a flexible position to watch the data and be patient. We’re going to need to see several months of that data to really have confidence in our outlook that we’re headed to 2% on inflation.” At the same time, St. Louis Fed President Alberto Musalem said U.S. interest rate cuts could be delayed for some time, indicating it’s more likely to take “quarters” rather than months to see data supporting a reduction. Also, Boston Fed President Susan Collins said, “It is too soon to determine whether inflation is durably on a path back to the 2% target, and this process may just take more time than previously thought.” Finally, Richmond Fed President Thomas Barkin described recent U.S. inflation figures as “very encouraging,” but emphasized the need for continued progress toward the Fed’s 2% goal.
Meanwhile, U.S. rate futures have priced in a 10.3% chance of a 25 basis point rate cut at the next FOMC meeting in July and a 57.9% chance of a 25 basis point rate cut at September’s policy meeting.
On the earnings front, notable companies like Accenture (ACN), Kroger (KR), Darden Restaurants (DRI), Jabil (JBL), and Winnebago (WGO) are slated to release their quarterly results today.
On the economic data front, all eyes are focused on the U.S. Philadelphia Fed manufacturing index, set to be released in a couple of hours. Economists, on average, forecast that the June Philadelphia Fed manufacturing index will stand at 4.8, compared to the previous value of 4.5.
Also, investors will focus on U.S. Initial Jobless Claims data. Economists estimate this figure to arrive at 235K, compared to last week’s number of 242K.
The U.S. Building Permits (preliminary) and Housing Starts data for May will be reported today. Economists forecast Building Permits to be 1.450M and Housing Starts to be 1.370M, compared to the previous numbers of 1.440M and 1.360M, respectively.

Technically we are still holding onto the bullish bias.

With the SPY and QQQ holding at these ATH's and the DIA and IWM still trying to get back above their respective 50DMA levels.

My market bias for today is neutral. Technicals are all bullish but we've been on a very long, seven day, sustained run to the upside in the SPX. We are due for a pause.