Market analysis for March 1st, 2024

Welcome to the month of March! Feb. was a solid month for us even though it seemed like we had to fight for it more than we wanted. Yesterday continued a nice string of wins for us this week. Firstly, we've done 87 earnings trades (not really, but it feels like it) and had a very fortunate run of success with those. We have DELL, ESTC, ZC, SOUN all expiring today and they all look good although DELL may benefit from a roll. We had three 0DTE's yesterday that all went out at max gains.  I had $11,500 total capital committed and generated $1,533 in total profits. Scalping did its job for us yesterday with an $1,173 profit. My net liq was up a healthy $7,255 at the close.

Futures this morning are pushing us right back to the buy zone. It seems that every time we get a neutral or sell rating technically, its because we have a lack of buyers, not because sellers are in control.

PMI will be the big news catalyst for today. We also have Fed's Barkin Speaking before the open 
Friday 1st March
09:45 ET
US S&P Manufacturing PMI February Final
The US S&P Manufacturing Purchasing Managers’ Index is an economic indicator that measures the performance of the manufacturing sector.
It provides insight into factors such as new orders, production levels, employment, supplier deliveries, and inventory levels.
As a diffusion index, a reading above 50 indicates expansion in the sector, while a reading below 50 suggests contraction. The S&P Manufacturing PMI is based on a survey of purchasing managers in the manufacturing industry.
What to Expect
The markets still seem to think that ‘good news is bad news’ with this report, though it has less weight than its counterpart (The ISM Manufacturing PMI, detailed below)
Nonetheless, this means that if the manufacturing PMI comes in above expectations, especially in expansionary territory (50+), then stocks are likely to weaken, and the dollar is likely to strengthen.
This is because it is seen as an upside inflation risk, as it indicates there is still strong demand for manufactured goods, despite high interest rates.
Morgan Stanley note that the 0.8 point rise in the S&P manufacturing index to 51.5 in February (P) was broad-based, with increases in indexes of output, new orders, and employment from levels already above 50, along with improved supplier deliveries. The overall index was at its highest since September 2022.
10:00 ET
US ISM Manufacturing PMI for February
The US ISM Manufacturing Purchasing Managers’ Index measures the economic activity and sentiment of manufacturing sector managers.
It assesses factors like new orders, production, employment, supplier deliveries, and inventories.
The index is compiled from a survey of purchasing managers as a diffusion index, with a reading above 50 indicating expansion and below 50 indicating contraction.
The US S&P Manufacturing PMI also measures manufacturing sector activity but uses a different methodology and survey structure. While both PMIs aim to gauge the health of the manufacturing sector, they may differ in their coverage, sample size, and methodology, leading to variations in the reported figures.
What to Expect
The markets still seem to think that ‘good news is bad news’ with this report.
This means that if the manufacturing PMI comes in above expectations, especially in expansionary territory (50+), then stocks are likely to weaken, and the dollar is likely to strengthen.
This is because it is seen as an upside inflation risk, as it indicates there is still strong demand for manufactured goods, despite high interest rates.
“The sector faces ongoing headwinds from high-interest rates, heightened economic uncertainty and expenditure switching towards services.” Unicredit noted.
“Supply-chain disruption in the Red Sea may show up as a lengthening of suppliers’ delivery times and higher input price pressures.”
Societe Generale noted that they look for a decline in the orders component, offset by gains throughout the other components.
University of Michigan Sentiment February Final
The University of Michigan Consumer Sentiment Index, often referred to as the Consumer Sentiment Index or just Consumer Sentiment, is a widely followed economic indicator that measures the confidence of American consumers in the state of the economy.
It is based on a survey conducted by the University of Michigan, which gathers data on consumers’ attitudes and expectations regarding their personal finances, business conditions, and overall economic outlook.
The index is released monthly and is considered a leading indicator of consumer spending, as confident consumers are more likely to spend money on goods and services, driving economic growth.
What to Expect
Consumer sentiment is closely watched by markets to assess consumer resilience in a high-interest-rate environment. Elevated sentiment may suggest strong demand, potentially leading to inflationary pressures, but it could also signal consumer resilience, reducing recession fears.
In this release, the market focus is on the 1 & 5-year inflation expectations accompanying the sentiment data.
Higher inflation expectations may delay Fed rate cuts, affecting US stocks negatively and strengthening the dollar.
“Moderate numbers from the Fed’s preferred inflation gauge may lower temperatures after ‘hot’ CPI and PPI readings a couple of weeks ago. While rate cuts are still unlikely until the second half of the year,” said Chris Larkin, managing director for trading and investing at E*Trade from Morgan Stanley.
Atlanta Fed President Raphael Bostic said Thursday that if the economy evolves as he expects, it will likely be appropriate for the U.S. central bank to begin interest rate cuts in the summer. Also, San Francisco Fed President Mary Daly said that policymakers stand prepared to reduce interest rates as needed but stressed that there’s currently no immediate need for cuts given the robustness of the economy. In addition, Cleveland Fed President Loretta Mester said Thursday’s inflation data indicated that central bank officials have more work to do to cool price pressures, but she maintained her expectation that the Fed will implement three interest rate cuts this year.
Meanwhile, U.S. rate futures have priced in a 3.0% chance of a 25 basis point rate cut at the conclusion of the Fed’s March meeting and a 25.2% chance of a 25 basis point rate cut at the May FOMC meeting.

Our bond ladder looks to come in, spot on for the week with about $550 dollars of cash flow. $2,000/mon. in cashflow is the goal.

​Markets overall look pretty healthy here:

We continue to consolidate around the ATH's on most indices:

Intra-day levels for me:
/ES; 5103/5116* (key level. yesterdays high)/5127/5138 to the upside. 5094/5082/5071/5059*(key level. low of day yesterday) to the downside.
/NQ; 18162* (key level. yesterdays high)/18273/18376/18557 to the upside. 18035/17954/17897/17850* (key level. Yesterdays low) to the downside.

Trade docket today: /MNQ, KODK?, /MCL, /ZN?, GOOG, IWM, META, SPX/NDX/Event contract 0DTE's, SPY/QQQ, NVDA, DELL, ESTC, ZC, SOUN, WYNN?, /ZC?, /ZW?, FSR, DWAC, VKTX, PLUG?

Have a great weekend all!