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Good morning traders! Welcome to a new week of opportunities. Well...if last Thursday was picture perfect for us, with everything we touched working, Friday was the opposite. Nothing I touched seemed to work well on Friday save for one or our four 0DTE's. It wasn't enough to help my net liq.
Charts continue to point up on all the major indices:  Here's a full list of the planned news items that could be market moving catalysts: Tuesday 5th March 09:45 ET US S&P Services PMI February Prelim The US S&P Services Purchasing Managers’ Index evaluates the health of the services sector in the United States. Through surveys conducted among purchasing managers in diverse industries, such as finance, healthcare, and retail, the PMI assesses key factors like employment, new orders, and business activity. As a diffusion index, a PMI score above 50 indicates expansion in the sector, reflecting positive economic activity, while a score below 50 suggests contraction. What to Expect Markets have been reacting positively to lower Services PMI data, as seen in the last release. This is most likely due to the services sector getting closer to contraction, which may aid in taming inflation. The service sector is also an area where the Fed has said they need to see some more cooling. 10:00 ET US ISM Service PMI for February The US Institute for Supply Management Services Purchasing Managers’ Index, like the S&P Services PMI, measures the health of the services sector. Similar to other PMI indicators, a reading above 50 indicates expansion in the services sector, while a reading below 50 suggests contraction. What to Expect Markets have been reacting positively to lower Services PMI data, as seen in the last release. This is most likely due to the services sector getting closer to contraction, which may aid in taming inflation. The service sector is also an area where the Fed has said they need to see some more cooling. Therefore a lower-than-expected reading may result in US stock strength and Dollar weakness. US Durable Goods January Final Durable goods refers to goods that have a lifespan extending over three years. In the United States, the Census Bureau publishes a monthly report called the “Durable Goods Orders” report. This report tracks the new orders placed with domestic manufacturers for delivery of factory hard goods, such as refrigerators, cars, and industrial machinery, which are expected to last three years or more. The data in this report is a key economic indicator as it provides insight into the health of the manufacturing sector and overall economic activity. What to Expect US Durable Goods is currently nearing a good place, this could mean any shock deviations from forecast could be negative for stocks and the dollar, as any extreme weakness could foreshadow the manufacturing sector going into free fall. A much higher reading may show overheating in the sector. Wednesday 6th March 08:15 ET US ADP Employment Change for February The ADP Employment Change compiled by the ADP Research Institute utilizes actual payroll data from a diverse array of private-sector employers to gauge changes in employment levels. Excluding government and farm employment, the ADP figures provide insights into the dynamics of the private labor market, covering small, medium, and large businesses. What to Expect While the Fed does wish to uphold its dual mandate of 2% inflation with maximum job growth, an overly hot reading may have negative implications for the future of inflation. This could send the dollar up and stocks down. 09:45 ET BoC Rate Decision The Bank of Canada Interest Rate Decision is the main monetary policy tool where the Bank of Canada’s Governing Council determines the official interest rate for the Canadian economy. This rate, known as the overnight rate, influences short-term interest rates and serves as a key benchmark for borrowing costs in the country. What to Expect The Bank of Canada uses this rate to achieve its inflation target and support overall economic goals. Changes in the interest rate can impact consumer spending, business investments, and inflation. It is widely expected that the BoC will leave rates unchanged at 5%. If realized, attention will turn to the subsequent BoC rate statement for any clues on the future path of BoC interest rates. Any mention of more rate cuts this year than are already priced in by the markets could prompt strength in Canadian stocks and weakness in the Canadian dollar. However, hawkish remarks implying fewer interest rate cuts than are currently priced this year could result in the opposite. 10:00 ET US JOLTS Job Openings for January The US Job Openings and Labor Turnover Survey (JOLTS) provides monthly data on job openings, hires, separations, and other labor market dynamics in the United States. It offers insights into the demand for labor and the overall health of the job market. Job openings represent unfilled positions that are actively being recruited for by employers. Analyzing JOLTS data helps assess trends in job creation, labor market tightness, and worker mobility, providing valuable information for understanding the dynamics of the US labor market. The JOLTS data is the oldest bit of employment data this week, representing the month of January, while ADP and Nonfarm Payrolls reports represent the month of February. Having said that, with employment a key piece of the Fed’s monetary policy puzzle, markets will still monitor this. What to Expect If JOLTS comes in higher than expected, that indicates there are a larger number of job openings, which means that there is demand on the corporate side to hire more staff. This can be seen as an upside inflation risk, and a threat to the Fed’s 2% inflation target, as higher demand for staff indicates corporations are not being affected as the Fed would like by tight monetary policy. This could cause strength in the dollar and weakness in US stocks. 10:30 ET Weekly EIA Crude Oil Inventories The US Weekly Energy Information Administration Crude Oil Inventories report provides information on the total stockpile of crude oil in the United States. It includes data on the changes in crude oil inventories, indicating whether there has been an increase or decrease in the amount of oil held in storage. This report assesses supply and demand dynamics in the oil market and can influence oil prices. What to Expect A significant buildup in inventories may indicate oversupply, putting downward pressure on prices, while a decline may suggest increased demand, potentially impacting prices in the opposite direction. 14:00 ET Fed’s Beige Book The Federal Reserve’s Beige Book, formally known as the Summary of Commentary on Current Economic Conditions, is a report published eight times a year. It provides anecdotal information on current economic conditions in each of the 12 Federal Reserve districts, based on interviews with business contacts, economists, market experts, and other sources. The Beige Book serves as a qualitative assessment of the economy, offering insights into trends in various sectors such as manufacturing, retail, real estate, and agriculture. What to Expect The Beige Book is extremely unlikely to move the markets, as the data is anecdotal; however, it can still provide some important context to the affects of the Fed’s monetary policy on real people’s businesses in a more tangible way. Thursday 7th March 08:30 ET US Trade Balance for January The US Trade Balance for January is an economic indicator that measures the difference between the value of the goods and services exported by the United States and the value of goods and services imported into the country during that month. A positive trade balance indicates that exports exceed imports, which can contribute positively to economic growth and employment. Conversely, a negative trade balance, or trade deficit, means that imports exceed exports, which can put downward pressure on economic growth and employment. The US Trade Balance provides insights into the country’s international trade dynamics and its impact on the overall economy. What to Expect As a major importer of goods, the US has been in a trade deficit since 1975. While unlikely to move the markets, a smaller than expected trade deficit would indicate higher growth in the US, which could be seen as an upside inflation risk if it is considerably smaller than expected, or, if it is only marginally smaller, could ease recession fears. US Weekly Initial & Continued Jobless Claims The US Initial Jobless Claims report provides data on the number of individuals who filed for unemployment benefits for the first time during the previous week. It serves as an indicator of the labor market’s health, with higher numbers indicating increased layoffs and economic instability, while lower numbers suggest a stronger job market. Continued Jobless Claims, on the other hand, represent the number of individuals who remain on unemployment benefits after their initial claim. What to Expect Employment is one of the Fed’s mandates, however, FOMC officials have mentioned that they do see a higher unemployment rate being in line with their goal back to 2% inflation. This means that Jobless Claims coming in higher than expected, suggesting higher unemployment, would be likely to be read by the Fed as good news for inflation’s return to target. This scenario could cause US stocks to strengthen and the dollar to weaken. Friday 8th March 08:30 ET US Employment Situation for February US Nonfarm Payrolls US Nonfarm Payrolls, commonly referred to as NFP, is a key economic indicator published by the Bureau of Labor Statistics on a monthly basis. It represents the total number of paid workers in the US, excluding farm employees, government workers, and non-profit organization employees. The NFP report provides insights into the overall health of the labor market, reflecting changes in employment levels. The data is closely watched by policymakers, economists, and investors for its impact on financial markets and economic policy decisions. US Unemployment Rate The US Unemployment Rate is a widely tracked economic indicator that measures the percentage of the labor force that is unemployed and actively seeking employment. It is calculated by dividing the number of unemployed individuals by the total labor force. The Unemployment Rate can differ from the Nonfarm Payrolls data due to differences in their definitions and methods of measurement. While NFP represents the total number of paid workers in the US, excluding certain categories like farm and government employees, the Unemployment Rate considers the percentage of the labor force that is actively seeking but unable to find employment. US Average Earnings YoY US Average Earnings Year-over-Year is an economic indicator that measures the annual percentage change in the average earnings of all non-farm employees in the United States. This data is typically derived from the monthly employment reports released by the US Bureau of Labor Statistics. Average earnings include wages and salaries, and the YoY comparison helps assess the rate of change in workers’ compensation over a one-year period. Positive growth in Average Earnings YoY is indicative of increasing income levels, while negative growth suggests a decline in average earnings. Policymakers, economists, and investors monitor this indicator for insights into wage trends and their implications for consumer spending and inflation. What to Expect US NFP is the most closely watched employment indicator by traders and policymakers alike. A higher-than-expected read indicates that employment is not slowing down, which poses an upside risk to inflation. This could cause policymakers to keep interest rates higher for longer. This repricing of the future of US monetary policy could be likely to cause weakness in US stocks, and strength in the dollar. The inverse could also be the case. Having said this, participants will also be looking at the average earnings data to see if increased wages are also causing potential upside inflation risks. In comments from Powell and other FOMC officials, they have also noted a refocus back onto the ‘dual mandate’, (which includes employment), so while a slight cooling in the employment situation may be seen as reinforcing dovish Fed bets, too much could go against the other element of the Fed’s dual mandate, and increase recession fears. On the earnings front, notable companies like CrowdStrike Holdings (CRWD), Target (TGT), Ross Stores (ROST), Broadcom (AVGO), Costco (COST), Kroger (KR), MongoDB (MDB), DocuSign (DOCU), NIO Inc. (NIO), and Gap (GPS) are slated to release their quarterly results this week. Here are 5 things to watch this week in the Market. Earnings Still in the public eye are earnings, and while many of the big movers are behind us, we still have some to watch this week. Tuesday before the open Target (TGT) reports and similar to Walmart this name could be a view of things to come. If their foot traffic is decreasing and average purchases have decreased it could be an indicator that the economy is as rosy as some of the numbers say. Broadcom (AVGO) and Costco (COST) report on Thursday after hours and these are important for different reasons. Broadcom recently bought VMware but has promised to hike prices, sometimes by up to 10x the current rate. This could be a huge mistake as many places are looking to push towards open source, or it could end up being a huge benefit like Netflix (NFLX) when they implemented account restrictions. Costco's earnings will be more in the vein of Target in that foot traffic and sales numbers could be important information, especially given the size of their demographic reach. ISM Service PMI On Tuesday we have ISM services PMI which is an indicator of industry expansion or contraction. The last several releases have all been over 50, which indicates expansion but just barely. Given all of the concerns about the economy lately, if this comes in as a miss or under 50, we could see the market start to sell. If this comes in at expectations or over we could see the market start to rally. JOLTS Job Openings The Job openings number is out at 10 am on Wednesday and could provide some short-term volatility to the market. Jobs are often seen as a leading economic indicator so watching how many openings there are could be a further clue about economic health. Also important is to watch for any previous month's revisions that might change the previous outlook on the market. Powell Testifying We have Powell testifying at the Semi-Annual Monetary Policy Report in the House this week as well. He will Speak on Wednesday and Thursday starting at 10 am Eastern. While its unlikely he will say anything incredibly profound during the testimony, he is still the lead Central Banker for the country and what he says about the economic status of the country and his plan for rates could provide some volatility in the market. Non-Farm Payroll Non-farm Employment Change or Non-farm Payrolls for short is due out Friday at 8:30. This is usually regarded as a solid temperature gauge for how the workforce is doing. We are expected to come in 190K jobs but if the last few months are any indication we could be in for a huge beat. The last few times we have beat the market went on to really rally during the day so it's possible this time is no different. The other thing to watch for is if any revisions are made to last month's numbers, as it could be that things aren’t as healthy as they seemed on the surface. There are a couple of areas of interest to me in this market. #1. Is Bitcoin. During bitcoins life its only spent 0.81% of its time above 61,000. Its now 65,000  Even if your not a "crypto guy/gal" its important because its affecting a lot of underlying equites that have bitcoin exposure, I.E. MSTR. #2. SMCI. Add the words "Artificial Intelligence" to any stock and it gets interesting in this market. We had a very successful SMCI trade last week but this is a wild one to trade. Up another 15% pre-market. Keep and eye on this one. Set to join the SP500 it could stil have legs in this monster move.  #3. Is NVDA. It's important to note that while this market seems bullet proof and "just goes up", the "Magnificent seven" now comprises 30% of the SP500 market cap! NVDA is the biggest component. It's pretty clear now that, as these seven stocks go, so goes the market.  Todays trade docket consists of: All four of our ladder trades, OIl, Bonds, Gold, DIA. SPY/QQQ 4DTE's, DELL, GCT, GOOG, IWM, META, NDX/SPX/Event contract 0DTE's, NVDA, SBUX and possible a few more as the day develops. Intra-day levels for me: /ES; 5149* (key level its been hitting overnight)/ 5156/ (above 5156 there isn't enough data to venture a level.) 5126/5111/5101/5087 to the downside. /NQ; 18370* (key level or resistance)/18445/18537/18600 to the upside. 18289/18240/18161/18024* (key level) to the downside. Futures are flat this morning as I type this. Good luck on your trading day! 
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November 2024
AuthorScott Stewart likes trading, motocross and spending time with his family. 
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