Market analysis for Jan. 2nd, 2025

Welcome back traders! I hope everyone had a great New Years day off! It's always a good thing to take breaks from your trading routine and "sharpen the saw" a bit. We had an amazing day on Tues. Our ratio trades worked out well. In addition to the 1HTE's we've introduced on Bitcoin well be adding directional trades to BTC as well to our daily setups. These will be largely 0DTE or day trade setups but done on a swing trade basis. This, along with our Friday equity 0DTE opportunities should give us plenty of opportunities to hit our goal of $250,000+profit this year. You can, of course, track our progress here in the blog on a daily basis. Here are our results from Tues.

I start this new trading year with a good spirit and a lot of hope for the potential that we have. The market has done something it rarely does. It's booked two consecutive years of 20%+ gains. That's rare and when it does happen we usually have a bit of a let down the following year. That could be potentially a great thing for us. Down or even flat markets tend to have better I.V. than upward trending ones. Let's take a look at the markets before we start our trading day.
Tuesdays weakness has brought us to the edge of a cliff. The SPY now joins the IWM and DIA below their 50DMA's. The QQQ's are just holding on. You can see that all four indices are sitting on major consolidation zones. If we lose these levels we could get some significant downside.

Technicals have moved back to a neutral rating which seems appropriate for where we are sitting. A move higher off these consolidated levels would be bullish and a move below would trigger big potential bearish signs.

March S&P 500 E-Mini futures (ESH25) are up +0.56%, and March Nasdaq 100 E-Mini futures (NQH25) are up +0.73% this morning as trading resumed after the New Year’s Day holiday, with investors awaiting a new batch of U.S. economic data.
Technology stocks led the gains in U.S. equity futures, signaling a rebound on Wall Street following a four-day losing streak that marked the end of 2024. Treasury yields fell on the first trading day of the new year, boosting investors’ risk appetite.
In Tuesday’s trading session, Wall Street’s major indexes closed in the red, with the benchmark S&P 500 and the tech-heavy Nasdaq 100 dropping to 1-week lows. Tesla (TSLA) slid over -3% and was the top percentage loser on the S&P 500 after announcing a recall of 77,713 vehicles in China due to software issues and possibly faulty driver airbags. Also, chip stocks retreated, with Nvidia (NVDA) falling more than -2% to lead losers in the Dow and Micron Technology (MU) dropping over -1%. In addition, Sangamo Therapeutics (SGMO) plummeted about -56% after Pfizer terminated its collaboration and license agreement with the company to develop a novel gene therapy for hemophilia A. On the bullish side, U.S. Steel (X) surged more than +9% after the Washington Post reported that Nippon Steel proposed giving the U.S. government a veto over output cuts as part of a final effort to secure approval for its planned merger.
Economic data released on Tuesday showed that the U.S. October S&P/CS HPI Composite - 20 n.s.a. eased to +4.2% y/y from +4.6% y/y in September, stronger than expectations of +4.1% y/y.
“There’s no Santa Claus rally this week, but investors received the gift of gains in 2024. [It] was a massive year for equity gains driven by a trifecta of the AI explosion, a slew of Fed interest rate cuts, and a robust U.S. economy,” said Greg Bassuk, chief executive officer at AXS Investments.
Market participants are entering the new year with several challenges, chief among them inflation and the Federal Reserve’s reaction to it, particularly after Chair Jerome Powell indicated there would be fewer interest rate cuts ahead. The markets are currently pricing in about 50 basis points of additional interest rate cuts from the Fed this year. Another question is how the pro-growth policies of President-elect Donald Trump will impact consumer prices and federal finances. The growth outlook in Europe and China will be on investors’ radar as well.
Today, all eyes are focused on the U.S. S&P Global Manufacturing PMI, which is set to be released in a couple of hours. Economists, on average, forecast that the final December figure will be 48.3, compared to November’s figure of 49.7.
Investors will also focus on U.S. Initial Jobless Claims data. Economists expect this figure to be 222K, compared to last week’s number of 219K.
U.S. Construction Spending data will be reported today. Economists foresee this figure to come in at +0.3% m/m in November, compared to the previous number of +0.4% m/m.
U.S. Crude Oil Inventories data will be released today as well. Economists estimate this figure to be -2.400M, compared to last week’s value of -4.237M.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.534%, down -0.94%.

PMI and Jobless claims should be the news catalysts that drive the market today. Futures are up with strong moves as I type. I'd be slightly bullish today with my bias or lean.

Our trade docket for today and tomorrow is very straightforward. /MNQ and /NQ for our scalping program. /ES thetafairy. Possibly Bitcoin for a swing trade. 1HTE BTC trades. 0DTE on both SPX and NDX.

Our goal, as always, is to put us in a position to make at least $1,000 profit per day. 

Let's take a look at the intra-day levels for our 0DTE's today:
Because of the neutral technical rating today levels get expanded. /ES resistance is now at 6025 with support still holding at the same level it's been at for some time. 5920.

Levels have not changed for /NQ. 21716 is still working as resistance with 21215 working as support

We've had some good success with our 1HTE Bitcoin trades. BTC certainly has enough movement in it at the momement that is could make for a nice, intra-day swing trade opportunity as well. We will be adding these trades to our mix, when appropriate setups present themselves. For today it looks like 99,080 is resistance with 94,326 working as new support.

We're currently in the 2nd month (heading into the thrid) above the 125 year resistance trendline. The last time this happened was September 1929. Every time the recession indicator has been in this position the stock market has rolled over. $DJI

We've only violated the 125 year Dow Jones trendline once before in 1929. It did not end well...keep an eye on the Dow. As it goes, so goes the markets?

Let's have a great day folks. I'll see you all in the live trading room chat in a bit. I look forward to trading with you today.