Market analysis for Nov. 18th, 2024

Welcome back traders to a new week. I'll be trading out of Newport beach this week. There wasn't quite enough premium to get a Theta fairy on last night but we'll try again all week to get some more working. Friday was a mixed day for me. My net liq was o.k. with both our 0DTE bearish debit anchors showing nice profits but scalping killed my daily result.

We'll try to do better today.
Let's take a look at the markets. Technicals are still bearish.

For most of the indices we are right back to where we were before the Trump rally. What the election giveth...it now taketh. 

​The SPY continues to demonstrate relative strength compared to its index peers, closing just below the top of the post-election gap and ending the week at $585.75 (-2.09%). However, the daily MACD is flashing caution, with a bearish cross setting up. Should the price move lower next week, watch the aVWAP from the September low, which could serve as a crucial support level.

​The QQQ ended the week at $496.57 (-3.42%), giving back a significant portion of last week’s gains, closing below the July high, and nearly filling the entire post-election gap. With a decisive bearish MACD cross signaling the potential for further downside ahead, all eyes will be on the Anchored VWAP from the September low for a potential support level in the coming sessions.

​This week, IWM gave new meaning to the saying, “The higher they fly, the harder they fall.” After a nearly 9% gain last week, small caps led the decline among their peers, closing at $228.48 (-4.06%). Price has now dropped well into the post-election gap, with the bottom of the gap and the September low Anchored VWAP just below. For bulls, this very well might be a make-or-break level in the sessions to come.

December S&P 500 E-Mini futures (ESZ24) are up +0.09%, and December Nasdaq 100 E-Mini futures (NQZ24) are up +0.35% this morning as market participants looked ahead to an earnings report from semiconductor stalwart Nvidia, a new batch of U.S. economic data, and comments from Federal Reserve officials.
In Friday’s trading session, Wall Street’s major averages closed sharply lower, with the benchmark S&P 500 and tech-heavy Nasdaq 100 falling to 1-1/2 week lows and the blue-chip Dow dropping to a 1-week low. Applied Materials (AMAT) slumped over -9% and was the top percentage loser on the S&P 500 and Nasdaq 100 after the largest U.S. maker of chip-manufacturing equipment provided a disappointing FQ1 revenue forecast. Also, AST SpaceMobile (ASTS) slid more than -9% after reporting a wider-than-expected Q3 loss. In addition, Pfizer (PFE) fell over -4% after Wolfe Research initiated coverage of the stock with an Underperform rating and a $25 price target. On the bullish side, Palantir Technologies (PLTR) surged more than +11% and was the top percentage gainer on the S&P 500 after announcing that it will transfer its stock exchange listing from the New York Stock Exchange to the Nasdaq.
Economic data released on Friday showed that U.S. retail sales grew +0.4% m/m in October, beating the +0.3% m/m consensus, while core retail sales, which exclude motor vehicles and parts, edged up +0.1% m/m, weaker than expectations of +0.3% m/m. Also, the November Empire State Manufacturing index unexpectedly rose to a 2-3/4 year high of 31.20, stronger than expectations of -0.30. In addition, U.S. industrial production fell -0.3% m/m in October, in line with expectations, while manufacturing production fell -0.5% m/m, in line with expectations. Finally, the U.S. October import price index unexpectedly rose +0.3% m/m, stronger than expectations of -0.1% m/m.
Boston Fed President Susan Collins stated on Friday that a December interest rate cut remains on the table, highlighting that the Fed’s decision will depend on incoming data. “I do see the policy stance as being in a restrictive place, and over time normalizing that, I think, is going to be important,” Collins said. Also, Chicago Fed President Austan Goolsbee said that if inflation continues to move toward the central bank’s 2% target, interest rates will be “a lot” lower over the next 12-18 months. However, he agreed with Fed Chair Jerome Powell, noting that policymakers are not rushing to reduce borrowing costs.
Meanwhile, U.S. rate futures have priced in a 61.6% chance of a 25 basis point rate cut and a 38.4% chance of no rate change at the conclusion of the Fed’s December meeting.
Market participants will focus on earnings reports from several prominent companies this week, with semiconductor giant Nvidia’s (NVDA) report on Wednesday drawing the most attention. Retailers such as Walmart (WMT), Target (TGT), Lowe’s (LOW), TJX Companies (TJX), and Ross Stores (ROST), along with notable companies like Palo Alto Networks (PANW), Snowflake (SNOW), Intuit (INTU), Deere (DE), and Medtronic (MDT), are also scheduled to release their quarterly results this week.
Investors will also be monitoring a spate of economic data releases this week, including the U.S. S&P Global Composite PMI (preliminary), the S&P Global Manufacturing PMI (preliminary), the S&P Global Services PMI (preliminary), the Philadelphia Fed Manufacturing Index, Building Permits (preliminary), Housing Starts, Crude Oil Inventories, Initial Jobless Claims, Existing Home Sales, the Leading Index, and the University of Michigan’s Consumer Sentiment Index.
In addition, Chicago Fed President Austan Goolsbee, Kansas City Fed President Jeffrey Schmid, Fed Governor Lisa Cook, Cleveland Fed President Beth Hammack, Fed Governor Michelle Bowman, and Fed Vice Chair for Supervision Michael Barr will be making appearances this week.
The U.S. economic data slate is mainly empty on Monday.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.456%, up +0.61%.

Let's take a look at the expected moves this week: Certainly not elevated but not low enough that we know we won't get any Theta fairy setups working this week. We'll look every day to see if one's viable.

My bias or lean today is slightly bearish. Futures are up as I type and today would be the day for bulls to show up and save the day if they choose to. Today is all about the "GAPS" and our re-fills on them over the last week. Will they hold here or give up? As I said, even with futures higher, the trend currently is down.

Trade docket for today: /MNQ, IWM, PLTR, DIA, /MCL, ORCL, SHOP, PYPL, FSLR, WYNN, WMT, LOW, NDT, SPY/QQQ, 0DTE's.

Let's look at our intra-day levels: 
/ES; Talk about sitting on a critical level! On the 2hr. chart we are sitting right at VWAP and the 200 period M.A. Today will be critical in determining future direction. There are three critical levels for me today. 5932 is the fist resistance. Bulls must first reclaim that. 5967 is the big one. Above that and, I believe our indicators go back to flashing bullish. 5875 is support. If we lose that the selling should continue.

/NQ: The Nasdaq has been beat up a bit more than the SP500. It could lead the way today. Strength here could pull everything else up. Bulls need to re-capture the 200 period M.A.  There are two key levels for me. 20702 is resistance and also corresponds to the 200 period M.A. and VWAP. 20403 is support. Below that we've got contiued downside potential.

BTC: Bitcoin has been in a bit of a holding pattern as of late.  94,079 is resistance. 88,247 is support. 

I look forward to seeing you all in the trading room shortly! No big news catalysts today so the price action should be fairly "pure". We'll see if bulls can step into the action today in any meaningful way.