Market analysis for Sept. 23rd, 2024

Good Monday morning traders! I hope your weekend was great. We got out of the house and did some Mtn. biking and hiking. It's always nice to get out and recharge the batteries. Don't let trading wear you down. It can be all consuming.
We had an fantastic Friday. See our results below:

It was an amazing day. It's rare that everything we touch works but that was the case Friday. Let's take a look at whats coming this week:

Despite hitting new all-time highs, the SPY was the weakest performer in percentage terms, finding resistance at the upper Bollinger Band and closing the week at $568.25 (+1.10%). Notably, the last two reversals were signaled by bearish crosses in overbought territory on the Stochastic Oscillator, a pattern that’s reemerging now.

​The QQQ benefited from the FOMC excitement this week, reaching a new monthly high and closing at $482.44 (+1.49%). However, like the SPY, it’s now showing signs of a potential reversal, with a bearish Stochastic cross forming as the price stalls just below the upper Bollinger Band

​With their sensitivity to interest rates, the stocks in IWM stand to benefit the most from this week’s rate cut—and the market took notice. The index posted the largest percentage gain, closing the week at $221.57 (+2.18%). A bearish cross of the Stochastics appears imminent while the price is facing resistance at the upper Bollinger Band.

Technicals are overstretched to the upside but they continue to flash buy signals 

Let's take a look at the expected moves this week: I.V. is back to a more "normal" level. This may put an end to our Theta fairy's for a bit.

​December S&P 500 E-Mini futures (ESZ24) are up +0.19%, and December Nasdaq 100 E-Mini futures (NQZ24) are up +0.25% this morning as market participants looked ahead to speeches from Federal Reserve officials, earnings reports from several notable companies, and the release of the Fed’s favorite inflation gauge later in the week.
In Friday’s trading session, Wall Street’s major averages ended mixed. FedEx (FDX) plunged over -15% and was the top percentage loser on the S&P 500 after the delivery services giant reported weaker-than-expected Q1 adjusted EPS and cut its full-year guidance. Also, semiconductor stocks lost ground, with ON Semiconductor (ON) slumping more than -5% and GlobalFoundries (GFS) falling nearly -4%. In addition, Lennar (LEN) slid over -5% after the company reported weaker-than-expected Q3 net new orders and offered soft Q4 gross margin guidance. On the bullish side, Nike (NKE) climbed more than +6% and was the top percentage gainer on the Dow after announcing that Elliot Hill will return as President and Chief Executive Officer, effective October 14th. Also, Intel (INTC) gained over +3% after the Wall Street Journal reported that Qualcomm approached the chipmaker about a potential takeover. 
“The market is still trying to recalibrate because, yes, there were some market participants that may have expected 50 basis points but a lot of people didn't,” said Sid Vaidya, U.S. chief wealth strategist at TD Wealth in New York. 
Fed Governor Christopher Waller stated Friday that favorable inflation data, rather than concerns about the labor market, persuaded him to back policymakers’ decision to reduce interest rates by a half percentage point at the September FOMC meeting. “What’s got me a little more concerned is inflation is running softer than I thought,” Waller said in an interview on CNBC. Waller noted that he would likely support quarter-point reductions at the next two Fed policy meetings, in November and December, if the economy evolves as he anticipates. “If labor market data worsens, or if the inflation data continues to come in softer than everybody was expecting, then you can see going at a faster pace,” he said. At the same time, Fed Governor Michelle Bowman said that lowering interest rates by 50 basis points could risk signaling that the central bank was declaring victory over inflation prematurely. “The committee’s larger policy action could be interpreted as a premature declaration of victory on our price stability mandate,” Bowman said in a statement released Friday. “I believe that moving at a measured pace toward a more neutral policy stance will ensure further progress in bringing inflation down to our 2% target.”
U.S. rate futures have priced in a 48.5% chance of a 25 basis point rate cut and a 51.5% chance of a 50 basis point rate cut at the conclusion of the Fed’s November meeting.
In the coming week, the August reading of the U.S. core personal consumption expenditures price index, the Fed’s preferred inflation gauge, will be the main highlight. Also, investors will be monitoring a spate of other economic data releases, including U.S. GDP (third estimate), CB Consumer Confidence Index, S&P/CS HPI Composite - 20 n.s.a., Richmond Manufacturing Index, Building Permits, New Home Sales, Crude Oil Inventories, Durable Goods Orders, Core Durable Goods Orders, Initial Jobless Claims, Pending Home Sales, Goods Trade Balance (preliminary), Personal Income, Personal Spending, Wholesale Inventories (preliminary), and Michigan Consumer Sentiment Index.
Meanwhile, Fed Chair Jerome Powell is set to deliver pre-recorded opening remarks at Thursday’s 2024 U.S. Treasury Market Conference hosted by the Federal Reserve Bank of New York, marking his first comments since last week’s press conference. A host of other Fed officials will also be making appearances throughout the week, including Bostic, Goolsbee, Kashkari, Bowman, Kugler, Collins, Williams, Cook, and Barr.
Several notable companies like Micron Technology (MU), Costco Wholesale (COST), Accenture (ACN), BlackBerry (BB), and AutoZone (AZO) are scheduled to release their quarterly results this week.
Today, all eyes are focused on the U.S. S&P Global Manufacturing PMI preliminary reading, set to be released in a couple of hours. Economists, on average, forecast that the September manufacturing PMI will come in at 48.6, compared to last month’s value of 47.9.
Also, investors will focus on the U.S. S&P Global Services PMI, which stood at 55.7 in August. Economists foresee the preliminary September figure to be 55.3.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 3.747%, up +0.52%.

My lean or bias today is slightly bullish. We are entering overbought territory but the technicals are still holding to that bullish bent. 

Trade docket for today: Back to a full slate after the FOMC past week. /ES (Theta fairy), /MNQ scalping, /ZC, MRK/MRNA pair, AZO, FDX, IWM, /ZN, FSLS, WYNN, UPST, ORCL, CCL, CRM, PLTR, PYPL, SHOP.
NOTE: Our earnings plays this week are looking at KBH, MU, COSt, BB, AZO.

Let's take a look at our intra-day levels for 0DTE setups.
​/ES; Resistance is at 5782 with support at 5753.

/NQ: The /NQ levels are a bit more "solid" and established, meaning that if these levels break it could be a bigger potential driver for market moves. 20,164 is resistance and 19,949 is support.

BTC: Bitcoin has finally had a nice run. It's correlation to equities is amazing. It's been pitched over and over as a non-equity correlated underlying. That certainly hasn't been the case lately. The two key levels today are 64,259 as resistance and 62,432 on the support side.

Let's have a great day folks! It's interesting how powerful the mental aspect of trading is. It was great mentally for me to get out this past weekend and enjoy the outdoors....not thinking about trading. Having a strong performance on Fridays is always good. Not just for the wallet but mentally as well. It's a nice topper to the week. Starting our days with a $100 profit in our pocket from a Theta fairy is huge. It doesn't make us rich but mentally its a great way to start the day. Starting the week with a profitable Monday is powerful as well. See you all in the trading room shortly!