Market analysis for Oct. 11, 2024

Welcome to Friday! The week went by quick for me. I've got nothing planned for the weekend which means I'll probably be put to work around the house by the boss! CPI came and went. The market shrugged off the bad numbers. Will PPI make any difference today? We'll see shortly. We had a decent day yesterday. The NDX debit cover really stepped up and saved the day. Scalping was a loss for me and we rolled the SPX debit cover calls, once again. See our results below:

Markets are clinging to the bullish bias. 

I would have thought the hot CPI would have done more damage to the indices but they held up well. Bonds and the IWM are saying something very different from the FED. Everything else is pushing those ATH's.

Just a couple things I've been looking at that may be beneficial to your trading:
Small retail traders are "all in" on this market. This usually creates the top in the markets.
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This is not a forecast, but it is interesting.

​73.6% of S&P 500 Stocks are within 10% of their 52-week Highs... This is the highest level since July 2021

​December S&P 500 E-Mini futures (ESZ24) are trending down -0.32% this morning as market participants awaited crucial U.S. producer inflation data and earnings reports from some of the biggest U.S. banks.
In yesterday’s trading session, Wall Street’s major indexes ended in the red. PayPal Holdings (PYPL) slid over -3% after Bernstein downgraded the stock to Market Perform from Outperform. Also, chip stocks lost ground, with Advanced Micro Devices (AMD) slumping -4% to lead losers in the Nasdaq 100 and Intel (INTC) dropping more than -1%. In addition, Delta Air Lines (DAL) fell over -1% after the airline posted downbeat Q3 results and issued soft Q4 adjusted EPS guidance. On the bullish side, MongoDB (MDB) climbed more than +6% and was the top percentage gainer on the Nasdaq 100 after Piper Sandler listed ten reasons to buy the stock.
The U.S. Bureau of Labor Statistics report released on Thursday showed that consumer prices rose +0.2% m/m in September, stronger than expectations of +0.1% m/m. On an annual basis, headline inflation cooled to +2.4% in September from +2.5% in August, stronger than expectations of +2.3%. Also, the core CPI, which excludes volatile food and fuel prices, unexpectedly strengthened to +3.3% y/y in September from +3.2% y/y in August, stronger than expectations of no change at +3.2% y/y. In addition, the number of Americans filing for initial jobless claims in the past week increased by +33K to a 14-month high of 258K, compared with the 231K expected.
“The Fed said the last mile getting toward their inflation target is going to be tough, and that is what we are seeing,” said David Donabedian at CIBC Private Wealth US. “But we still expect the Fed to cut rates by a quarter point in November, and likely a similar cut at the December meeting.”
Chicago Fed President Austan Goolsbee stated on Thursday that he wasn’t overly concerned with a hotter-than-expected September inflation report and maintained his stance that the Fed has moved beyond focusing solely on price pressures. “The overall trend over 12 to 18 months is clearly that inflation has come down a lot and the job market has cooled to a level which is around where we think full employment is,” Goolsbee said. Also, New York Fed President John Williams said, “Looking ahead, based on my current forecast for the economy, I expect that it will be appropriate to continue the process of moving the stance of monetary policy to a more neutral setting over time.” At the same time, Atlanta Fed President Raphael Bostic said he would be “totally comfortable” skipping a rate cut at the next Fed meeting, noting that the “choppiness” in recent inflation and employment data might justify keeping rates unchanged in November.
U.S. rate futures have priced in an 84.4% probability of a 25 basis point rate cut and a 15.6% chance of no rate change at the next central bank meeting in November.
Meanwhile, the third-quarter corporate earnings season gets underway, with some of the biggest U.S. banks, including JPMorgan Chase (JPM) and Wells Fargo (WFC), slated to report their quarterly results today. According to Bloomberg Intelligence, companies in the S&P 500 are expected to post an average +4.7% increase in quarterly earnings for Q3 compared to the previous year, down from +7.9% growth projected in July.
On the economic data front, all eyes are focused on the U.S. Producer Price Index, which is set to be released in a couple of hours. Economists, on average, forecast that the U.S. September PPI will come in at +0.1% m/m and +1.6% y/y, compared to the previous figures of +0.2% m/m and +1.7% y/y.
The U.S. Core PPI will also be closely watched today. Economists expect September figures to be +0.2% m/m and +2.7% y/y, compared to the previous numbers of +0.3% m/m and +2.4% y/y.
The U.S. Michigan Consumer Sentiment preliminary reading will be reported today as well. Economists estimate this figure to arrive at 70.9 in October, compared to 70.1 in September.
In addition, market participants will be looking toward speeches from Dallas Fed President Lorie Logan, Chicago Fed President Austan Goolsbee, and Fed Governor Michelle Bowman.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.092%, down -0.07%.

PPI should be the driver for today's market so no levels or bias again today. We'll let the market do what it's going to do.

Trade docket for today: Very simple. /ES (thetafairy), /MNQ (scalping), JPM, FAST, QQQ/SPY, 0DTE's.

I'll see you all in the trading room. Let's see if we can bring our SPX debit cover home fro a win today!