Market analysis for Sept. 5th, 2024

Welcome to Thursday! Sometimes you just need a reset. I had a very small trade docket yesterday. I slimmed down my trade size and just wanted to log some "green" by the end of the day. We got back to our knitting, so to speak yesterday and scored some wins. It was a nice turn around from three consecutive down days. Here's my results. My goals are really the same for today and Friday. Let's just print some green on a short list of trades.

The Market is getting more and more bearish, it seems. Technicals are bearish. 

Most of the indices are back to threatening or breaching their 50DMA.

We've got some potential news catalysts today. ​September S&P 500 E-Mini futures (ESU24) are down -0.10%, and September Nasdaq 100 E-Mini futures (NQU24) are down -0.15% this morning as market participants awaited a new round of U.S. economic data, with particular attention on the ADP National Employment figures.
In yesterday’s trading session, Wall Street’s major indexes ended mixed. Dollar Tree (DLTR) plummeted over -22% and was the top percentage loser on the S&P 500 and Nasdaq 100 after the discount store operator posted downbeat Q2 results and cut its full-year guidance. Also, Zscaler (ZS) tumbled more than -18% after the cybersecurity company provided a below-consensus FY25 forecast. In addition, Super Micro Computer (SMCI) slid over -4% after Barclays downgraded the stock to Equal Weight from Overweight with a price target of $438. On the bullish side, Gitlab (GTLB) surged more than +21% after the DevOps company posted upbeat Q2 results and lifted its FY25 guidance. Also, Advanced Micro Devices (AMD) gained over +2% after appointing former Nvidia executive Keith Strier as its senior vice president of global AI markets.
A Labor Department report on Wednesday showed that the U.S. JOLTs job openings fell to a 3-1/2 year low of 7.673M in July, compared to an expected figure of 8.090M. Also, the U.S. July trade deficit widened to -$78.80B from -$73.00B in June (revised from -$73.10B), the largest deficit in 2 years. At the same time, U.S. factory orders rose +5.0% m/m in July, stronger than expectations of +4.7% m/m and the largest increase in 4 years.
“The markets may not be as nervous as they were a month ago, but they’re still looking for confirmation the economy isn’t cooling off too much,” said Chris Larkin at E*Trade from Morgan Stanley. “So far this week, they haven’t gotten it.”
Meanwhile, the Federal Reserve said Wednesday in its Beige Book survey of regional business contacts that economic activity was flat or declining in most U.S. regions in recent weeks. The report noted that economic activity grew slightly in three districts but declined or remained flat in nine, compared to five in the previous period. Employment levels were mostly flat or showed a slight increase. While layoffs were infrequently reported, some companies mentioned reducing shifts and hours, leaving advertised positions vacant, or decreasing headcount through attrition. “Employers were more selective with their hires and less likely to expand their workforces, citing concerns about demand and an uncertain economic outlook,” according to the Beige Book. In addition, the report stated that “Consumer spending ticked down in most districts, having generally held steady during the prior reporting period.”
San Francisco Fed President Mary Daly stated on Wednesday that the central bank needs to reduce interest rates to maintain a healthy labor market, but the extent of the cut will depend on incoming economic data. “As inflation falls, we’ve got a real rate of interest that’s rising into a slowing economy; that’s a basic recipe for over-tightening,” Daly told Reuters in an interview.
U.S. rate futures have priced in a 59.0% chance of a 25 basis point rate cut and a 41.0% chance of a 50 basis point rate cut at the September FOMC meeting.
On the earnings front, notable companies like Broadcom (AVGO), DocuSign (DOCU), Samsara (IOT), UiPath (PATH), and Smith & Wesson (SWBI) are set to report their quarterly earnings today.
Today, all eyes are focused on the U.S. ADP Nonfarm Employment Change data, set to be released in a couple of hours. Economists, on average, forecast that the August ADP Nonfarm Employment Change will stand at 144K, compared to the previous number of 122K.
Investors will also focus on the U.S. ISM Non-Manufacturing PMI and the U.S. S&P Global Services PMI. Economists foresee the August ISM Non-Manufacturing PMI to arrive at 51.3 and the August S&P Global Services PMI to be 55.2, compared to the previous values of 51.4 and 55.0, respectively.
U.S. Unit Labor Costs and Nonfarm Productivity data will be reported today. Economists forecast Q2 Unit Labor Costs to be at +0.9% q/q and Q2 Nonfarm Productivity to stand at +2.3% q/q, compared to the first-quarter numbers of +4.0% q/q and +0.2% q/q, respectively.
U.S. Initial Jobless Claims data will come in today. Economists predict this figure will hold steady at 231K, consistent with last week’s number.
U.S. Crude Oil Inventories data will be reported today as well. Economists estimate this figure to be -0.600M, compared to last week’s value of -0.846M.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 3.771%, up +0.08%.

My bias today is bearish...again. They say the "trend is your friend". Well, the trend is down.

Trade docket for today is light again and should be tomorrow also. /MCL, /MNQ and QQQ scalping, DELL, DIA, DLTR, FSLR, IWM, 0DTE's. 

One trade we try to work each week is NVDA. It's been tough to get a trade on this week. Here's some interesting stats on NVDA. ​Nvidia shed $279 billion in market value Tuesday, the largest one-day decline in U.S. stock history, as concerns about a slowing economy sent jitters across Wall Street. Prior to the carnage, Meta was the record-holder for the steepest market capitalization drop in a single trading session with a $252 billion sell-off in February 2022.

• Insult to injury: Additional pressure was added to the stock after it was reported that Nvidia received a subpoena from the Department of Justice. Contrary to the report from Bloomberg, Nvidia said on Wednesday that it inquired with the DOJ and never received a subpoena. Bloomberg had said the DOJ sent requests to Nvidia and other third parties demanding information that could help evaluate whether Nvidia is engaging in anti-competitive behavior.
  

• Deny, deny, deny: A subpoena would represent an escalation of the investigation by the DOJ, which previously sent questionnaires to Nvidia and other companies following complaints from competitors that it was abusing its market power. Nvidia has denied any wrongdoing, saying in a statement to this week CNBC that “Nvidia wins on merit, as reflected in our benchmark results and value to customers, who can choose whatever solution is best for them.”
  

• Par for the course: Nvidia is responsible for 10 of the 20 largest single day market cap falls in global equity markets throughout history, according to analysis from Bloomberg Finance LP and Deutsche Bank. On the flip side, Nvidia’s $327 billion gain on July 31 this year is the largest single day gain in history, and the company is the holder of 9 of the 10 largest single day gains in global equity markets.
  

Let's take a look at some intra-day 0DTE levels I'll be watching.
​/ES: If we look on the daily chart you can see that yesterday, the final shoe dropped with MACD kicking in on the sell rating. For now the overall trend is a sell to the downside. 

/ES: on an intra-day basis, 5540 is near term resistance and 5509 is support. Inside this zone is just chop to me and meaningless. Above or below could create some movement.

/NQ;  Daily chart is a issuing a pretty clear sell signal. On the 2 hr. chart the chop zone is 200 points wide.  19029 is resistance and 18828 is support. Between here we don't get any signal change. Above or below these levels could see some additional trending.

Let's put up another day like yesterday. Simple, slow, focused effort and, if we do it well we should have four figures of green staring at us at the end of the day!