Market analysis for June 27th, 2024

We had another really solid day yesterday. Our re-set NVDA trade has a goal of producing $3,500 a week in income for us. After blowing that number away last week, it looked like this week would be below our goal but yesterdays adjustments brought us to close to $4,000 of potential income for the week. Yesterday was all about asymmetric trade setups. We put a lot of small, low probability but high profit potential trades on. Only one of them hit (SPX chicken Iron condor) but the risk was so small that it ended up being a great success. 

We had MU report after the close with dissapointing results. This knocked the futures down but we are still holding to a slight bullish bias technically.

Once again, yesterdays price action refused to give us any clarity or directional bias. The markets continue to coil here, building kinetic energy and preparing for their next move. It's still unclear when and what direction that will take. 

If you follow our trades you'll know that one of our all time favorite trades is the Theta fairy. Unfortunately we rarely get enough I.V. to get one on. A quick rule of thumb is we want $7.00+ of credit showing on a one standard deviation stike. As you can see, if are far from that. 

That, of course, is due to the low market I.V. as measured via the VIX1D.

We may have found a work around by replacing the /ES for the /MNQ. It's scalable, unlike the /ES and it has much better I.V.. Look for more Theta fairys in the near future as we switch our efforts to this new underlying.

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We've got some market catalysts incoming this morning. 
​Micron Technology (MU) slumped over -6% in pre-market trading after the memory chipmaker provided Q4 sales guidance that trailed the estimates of some investors, overshadowing its stronger-than-expected Q3 results.
In yesterday’s trading session, Wall Street’s main stock indexes closed in the green. FedEx (FDX) surged over +15% and was the top percentage gainer on the S&P 500 after the shipping giant posted upbeat Q4 results, provided a strong 2025 adjusted EPS forecast, and said it would buy back $2.5 billion of its stock over the next year. Also, Apple (AAPL) gained +2% after Rosenblatt Securities upgraded the stock to Buy from Neutral with a price target of $260. In addition, Whirlpool (WHR) climbed over +17% following a report from Reuters that Robert Bosch GmbH is contemplating an offer for the appliance maker. On the bearish side, Moderna (MRNA) plunged about -11% and was the top percentage loser on the S&P 500 and Nasdaq 100 following new data indicating that the efficacy of its RSV vaccine declined significantly in the second year and was inferior to that of rival vaccines.
Economic data on Wednesday showed that U.S. new home sales fell -11.3% m/m to a 6-month low of 619K in May, weaker than expectations of 636K. Also, U.S. May Building Permits were revised higher to 1.399M from a preliminary estimate of 1.386M, yet still marked the lowest level since June 2020.
The Federal Reserve said on Wednesday that the largest U.S. banks passed the annual stress test, clearing the path for higher shareholder payouts. The results indicated that while large banks would face greater losses compared to the 2023 test, they remain well-positioned to weather a severe recession, according to the central bank. “While the severity of this year’s stress test is similar to last year’s, the test resulted in higher losses because bank balance sheets are somewhat riskier and expenses are higher,” said Fed Vice Chair of Supervision Michael S. Barr.
Fed Governor Michelle Bowman on Wednesday reiterated her baseline view that “inflation will decline further with the policy rate held steady,” and she also stated that rate cuts would be “eventually” appropriate if inflation moves sustainably toward 2%.
U.S. rate futures have priced in a 10.3% chance of a 25 basis point rate cut at the July FOMC meeting and a 56.3% probability of a 25 basis point rate cut at September’s policy meeting.
Meanwhile, market participants will be keeping an eye on the first U.S. presidential debate of the 2024 election later today, featuring Democratic President Joe Biden and his Republican challenger Donald Trump.
On the earnings front, notable companies like Nike (NKE), McCormick (MKC), Walgreens Boots Alliance (WBA), and Acuity Brands (AYI) are slated to release their quarterly results today.
On the economic data front, all eyes are on the Commerce Department’s final estimate of gross domestic product, set to be released in a couple of hours. Economists, on average, forecast that U.S. GDP will stand at +1.3% q/q in the first quarter, compared to +3.4% q/q in the fourth quarter.
Also, investors will focus on U.S. Durable Goods Orders data, which came in at +0.7% m/m in April. Economists foresee the May figure to be -0.5% m/m.
U.S. Core Durable Goods Orders data will be reported today. Economists estimate this figure to come in at +0.2% m/m in May, compared to the previous number of +0.4% m/m.
U.S. Pending Home Sales data will come in today. Economists expect May’s figure to be +0.6% m/m, compared to the previous figure of -7.7% m/m.
U.S. Initial Jobless Claims data will be reported today as well. Economists estimate this figure to be 236K, compared to last week’s number of 238K.

Trade docket for today: NKE, WBA, LEVI, MU, /ZC, /ZN?, DELL, FDX, MSTR?, 0DTE's, PLTR, PYPL, Theta Fairy using /MNQ.

My lean for today: Slighty bullish even with the futures down. I think the market shrugs off MU's dissapointing earnings. Of course Jobless claims/ GDP/ Durable goods numbers may change all that.

No initial intra-day levels for me yet as we have lots of news catalysts incoming shortly.

We'll talk about levels in our live chat room later in the day once we get some price action. Have a great day everyone! Let's see if we can get a repeat of yesterday.