Market analysis for Oct. 8th, 2024

Welcome back traders! Well... I don't know what to say. We had another exceptional day yesterday, making almost $4,000 dollars profit in less than six hours. It's been an amazing run. In the last three weeks, on a $100,000 portfolio I've brought in over $40,000 in pure profit. You'll note the low return on the NDX debit cover 0DTE. I'll admit it. I'm trading scared. These runs NEVER last and we WILL have a losing day again. Probably many. That's just how it works but, I'm doing everything to push it off as long as I can. Trading scared is not neccessarily a bad thing. It focuses you on risk management and cutting losses quickly. Here's our results below:

Our day trades get all the focus and require the most work but let me toot my horn for a bit on our very, very diversified model portfoio. We've got things in our portfolio (Pairs trades, Commodities, Oil, Nat gas, Silver, Currency, Crypto etc) that most people never even think or know to trade. Most are completely non correlated to the equity markets. I think we've got a good shot of making 9% returns for the month on those positions. That's over 100% a year for those like me that didn't major in math! There's a trade setup for everyone. If you can't be happy with our positions you can't be happy as a trader because, we do it all. Scalping is killing it for us! The Theta fairy has been back more regularly and earnings plays continue to contribute to our success. Folks...all I can say is what we are doing is working. Let's try to not get ahead of ourselves and press our luck or deviate from our plan.

Let's look at the markets. Technically the slide yesterday put us into a neutral rating. I've been calling our levels neutral for a few days now. We are in a chop zone. Admittedly a large chop zone but the markets are forming a wedge pattern and looking to break out. We've got CPI/PPI inflation data later this week. Will that be enough to get stuff moving agian? I guess we'll find out soon enough.

IWM is in danger of losing it's 50DMA as interest rates spike on concern we won't get much else out of the FED this year in terms of rate cuts. All the other indices are just treading water. They look vunerable here IMHO.

​December S&P 500 E-Mini futures (ESZ24) are up +0.36%, and December Nasdaq 100 E-Mini futures (NQZ24) are up +0.40% this morning, signaling a partial rebound from yesterday’s slump, while investors awaited further comments from Federal Reserve officials, with all eyes on Thursday’s key U.S. inflation report and the start of earnings season.
In yesterday’s trading session, Wall Street’s major indexes closed lower. Amazon.com (AMZN) fell over -3% after Wells Fargo Securities downgraded the stock to Equal Weight from Overweight. Also, insurance companies offering property and casualty insurance in Florida slumped as Hurricane Milton strengthened to a Category 5 storm, with Heritage Insurance Holdings (HRTG) plummeting more than -23% and HCI Group (HCI) plunging over -17%. In addition, Apple (AAPL) dropped more than -2% after Jefferies downgraded the stock to Hold from Buy with a price target of $212.92. On the bullish side, Super Micro Computer (SMCI) surged over +15% and was the top percentage gainer on the S&P 500 and Nasdaq 100 after the server company reported strong shipments of its graphics processing units, fueled by artificial intelligence demand. Also, Pfizer (PFE) rose more than +2% after the Wall Street Journal reported that activist investor Starboard Value acquired a roughly $1 billion stake in the drugmaker.
Economic data released on Monday showed that U.S. consumer credit rose +$8.93B in August, weaker than expectations of +$11.80B.
Minneapolis Fed President Neel Kashkari stated on Monday that he believes the economy remains resilient and the labor market, despite showing some signs of softening, is still strong, with the Fed’s rate cuts intended to maintain these conditions. “The balance of risks has shifted away from high inflation towards maybe higher unemployment,” Kashkari said. “And that’s why I thought dialing back policy was the right move.” Also, St. Louis Fed President Alberto Musalem said he backed the U.S. central bank’s decision to lower interest rates by a half point last month but emphasized that he would prefer any further reductions to be gradual. “I believe it will likely be appropriate to further reduce the target range for the federal funds rate over time toward a neutral posture,” Musalem said. In addition, Fed Governor Adriana Kugler stated on Tuesday that the central bank should maintain its focus on returning inflation to its 2% target, albeit with a “balanced approach” that prevents an “undesirable” slowdown in employment growth and economic expansion. Kugler said she would support further cuts “if progress on inflation continues as I expect.”
U.S. rate futures have priced in an 88.7% chance of a 25 basis point rate cut and an 11.3% chance of no cut at the conclusion of the Fed’s November meeting.
Meanwhile, the crisis in the Middle East continued to unsettle investors, with fighting intensifying on Monday on multiple fronts after a year of war. The Israel Defense Forces stated that they intercepted the majority of a barrage of rockets launched toward Tel Aviv by Hamas and other groups backed by Iran.
Market participants are keenly awaiting U.S. inflation data, the Fed’s minutes from the September meeting, and the start of the third-quarter earnings season this week.
Financial sector earnings begin on Friday, with reports from JPMorgan Chase (JPM), Wells Fargo (WFC), and Blackrock (BLK). Food and beverage giant PepsiCo (PEP) is set to announce its Q3 earnings results today.
Today, investors will also focus on U.S. Trade Balance data, which is set to be released in a couple of hours. Economists forecast this figure to stand at -$70.10B in August, compared to the previous figure of -$78.80B.
In addition, market participants will be anticipating speeches from Atlanta Fed President Raphael Bostic, Boston Fed President Susan Collins, and Fed Vice Chair Philip Jefferson.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.018%, down -0.28%.

My lean or bias today is neutral again. Futures are up nicely as I type but unless we break out above resistance levels it still just results in chop. 

Our trade docket for today: /MNQ, QQQ scalping (killing it BTW), /ES (Theta Fairy), FANG/OXY, FDX, INTU/ORCL, IWM, MRK/MRNA, PEP, WYNN, SPY/QQQ, VXX, 0DTE's.

The best overall indicator for me of what the "market" is doing is the VTI. Total market index. It's rolled over and triggered a sell. Its a mild sell but a sell, nonetheless. Keep an eye on VWAP at 281. We break that and I'm adding to my short positions.

Let's take a look at the intra-day 0DTE levels:
​#1. /ES; Three weeks. Three full weeks of just treading water! Movement is coming. We just don't know when. There are only two levels I'm focused on today. 5790 is a resistance area that's been hit too many times to count. Bulls need to break through and hold this level. 5744 is a huge support. It's right around the 200 period M.A. on the 2 hr. chart. A break below here could get ugly.

#2. /NQ; Similar story here. Bulls need to break above (and hold) 20269. Support is 19993 and also correspondes to the 200 period M.A. on the 2hr. chart. A dip below that level could trigger some big sell side algos. 

#3. BTC:  We didn't get any crypto 0DTE's working yesterday because the edge just wasn't there. Resistance is weak at 63,750 and support is strong at 62,000. We'll see what we can find today as far as setups go. 

I'm going to work on "trading scared" again today. Let's not try to get rich. Let's focus on slow, consistent, steady gains througout the day.