Market analysis for Nov. 13th, 2024

We had an excellent day yesterday. Everything clicked for us. These are the "perfect" days when trading seems like the best job in the world. See our results below: 

Before we look at the markets I'd like to share some things I'm focusing on.
​Over half of equity ETFs are trading at least +2 standard deviations above their respective 200-day average

​The divergence between earnings revisions and S&P 500 performance suggests that investors are looking beyond current analyst estimates, potentially betting on stronger-than-expected corporate performance

​The S&P 500's CAPE Ratio has crossed above 38 for the 3rd time in history and is now higher than 98% of historical valuations

All this doesn't mean we are due for a crash but it does mean we are super stretched on valuations and "priced to perfection."

Let's look at the market. With the weakness yesterday and this morning in the futures we are back to the dreaded neutral rating. Very hard to guesstimate the directional move on these days. CPI will likely guide us.
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Are we starting a retrace or is this just a pause?

​December S&P 500 E-Mini futures (ESZ24) are trending down -0.19% this morning as investors held back from making big bets ahead of a crucial U.S. inflation report that could influence the Federal Reserve’s interest rate path.
In yesterday’s trading session, Wall Street’s three main equity benchmarks ended lower. Mosaic (MOS) slumped over -7% and was the top percentage loser on the S&P 500 after the company reported weaker-than-expected Q3 results. Also, homebuilder stocks lost ground after the benchmark 10-year Treasury yield jumped, with Lennar (LEN) and D.R. Horton (DHI) falling more than -3%. In addition, Novavax (NVAX) slid over -6% after cutting its full-year revenue guidance. On the bullish side, Tyson Foods (TSN) climbed more than +6% and was the top percentage gainer on the S&P 500 after the food giant reported stronger-than-expected FQ4 results. Also, Honeywell International (HON) rose over +3% and was the top percentage gainer on the Dow after activist investor Elliott Investment Management built a stake of more than $5 billion and called for a breakup of the industrial giant.
“We are on watch for potential profit taking, consolidation, or even correction for U.S. equities heading into the first quarter of the new year. Upward momentum remains strong and investor sentiment favorable, but stocks are once again overbought/extended across multiple timeframes,” said Dan Wantrobski at Janney Montgomery Scott. 
Richmond Fed President Thomas Barkin stated Tuesday that the U.S. economy is “in a good place.” “The Fed is in a position to respond appropriately regardless of how the economy evolves,” he added. Also, Minneapolis Fed President Neel Kashkari said that the central bank might pause its rate-cutting cycle in December if inflation surprises to the upside. “In my judgment, we are still at a modestly contractionary stance, but ultimately the economy will guide us, in terms of how far we are needing to go” in cutting rates, Kashkari said.
In other news, the Federal Reserve’s Senior Loan Officer Opinion Survey, released on Tuesday, showed that U.S. banks saw weaker demand for a key category of business loans in the third quarter, while demand for consumer credit card and auto loans also softened.
Meanwhile, U.S. rate futures have priced in a 65.8% chance of a 25 basis point rate cut and a 34.2% chance of no rate change at the next FOMC meeting in December.
On the earnings front, notable companies like Cisco (CSCO), Tower Semiconductor (TSEM), and CyberArk Software (CYBR) are scheduled to release their quarterly results today.
Today, all eyes are focused on the U.S. consumer inflation report, which is set to be released in a couple of hours. Economists, on average, forecast that the U.S. October CPI will come in at +0.2% m/m and +2.6% y/y, compared to the previous numbers of +0.2% m/m and +2.4% y/y.
The U.S. Core CPI will also be closely watched today. Economists anticipate the core CPI to be +0.3% m/m and +3.3% y/y in October, matching September’s figures.
A survey conducted by 22V Research showed that 55% of investors expect the market response to the consumer inflation report to be “mixed/negligible,” 31% anticipate a “risk-off” reaction, and only 14% expect “risk-on.”
In addition, market participants will be looking toward a series of speeches from Fed officials Kashkari, Williams, Logan, Schmid, and Musalem.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.414%, down -0.43%.

No bias or lean for me today. Neutral technicals and CPI make it a crap shoot to guess. 

Trade docket today: CSCO, HP, DIS, JD, CAVA, DKNG, FDX, IWM, MARA, OXY, PLTR, SHOP?, SMCI? SPOT, 0DTE's

Let's take a look at some intra-day levels:
/ES. 6047 is resistance with 5992 support. There is some decent downside potential below support.

/NQ: We are sitting on a cliff with the Nasdaq. 21207 is the important resistance for me. It's PoC on the 2hr. chart. 21100 is support and the edge of the "cliff". If we lose that we could get substantial downside.

BTC: Bitcoin briefly hit $90,000. It's back in a channel now. 90,235 is resistance. $86,904 is support.

Let's have a great day folks. We've got QQQ puts in our scalping room that we carried over from yesterday. Those could score for us right out of the gate. It would be a nice start to the day! See you in the trading room.