99 replies to this topic

[dTraderB]

FUNDSTRAT:
Will Jackson Hole Signal Risk-On?
Last weeks market movements strengthened Fundstrat Head of Research Tom Lees conviction that markets made their bottom on August 5. In fact, the S&P 500 has recovered all of the ground it lost during the recent selloff. Head of Technical Strategy Mark Newton was on a well-earned break this week, but he nevertheless managed to reach out from parts unknown to comment on the recent rally. The broader rally from early August is quite constructive and, as such, I do not expect any August drawdown to breach early August lows, he wrote.

Lee agrees, but he warns that despite the S&P 500 having just recorded its best weekly gain of the year, this does not mean bottoms go straight up. Recovering from bottoms is a process. Nevertheless, the VIX (volatility index) having fallen back under 20 after its selloff surge to 67 is a sign of relief, in his view. (The VIX was at 14.80 as of Fridays close.)

This week, we saw key data showing that inflation continues to decline. On Tuesday, wholesale inflation core PPI came in at -0.05% MoM, below Street expectations of +0.19%. The next day, Headline CPI YoY came in below 3% for the first time since March 2021, continuing a downward trend. July Core CPI came in at +0.17% MoM, better than consensus expectations of +0.19%.

As Lee told us, This is now the fourth consecutive soft inflation report and, to me, it solidifies the case for the Fed to start a rate-cutting cycle starting in September. Indeed, Fed Funds Futures trading implies unanimous market expectations for a Fed cut in September, with the uncertainty focused on whether we will see a cut of 25 bp or 50 bp. Markets will be looking for clues about this when Fed Chair Jerome Powell speaks at the annual Jackson Hole Economic Symposium next week (August 22-24).

Personally, Lee advocates bigger cuts. However, he concedes, this is not the markets stance, nor is it the Feds stance. For markets to anticipate a 50 bp cut, we would arguably need to see an unexpected level of economic softness. However, last weeks retail sales data points to the economys continued resilience. The headline consumer spending number for July beat expectations, up 1% MoM (versus 0.3% expected). When excluding purchases of gas and cars, consumer spending again beat expectations, up 0.4% MoM (0.2% expected).

As Head of Crypto Strategy Sean Farrell put it, In just a few days, the narrative has shifted. Likely thanks to a combination of non-recessionary yet disinflationary data, the market is now leaning back toward a soft-landing scenario rather than one driven by recession fears.

[dTraderB]

The Kobeissi Letter (@KobeissiLetter) posted at 9:44 AM on Sun, Aug 18, 2024:
Key Events This Week:

1. Fed Meeting Minutes - Wednesday

2. S&P Global Services PMI data - Thursday

3. July Existing Home Sales data - Thursday

4. July New Home Sales data - Friday

5. Fed Chair Powell Speaks - Friday

6. Total of 4 Fed speaker events this week

The S&P 500
(https://x.com/Kobeis...7568924067?s=03)

[dTraderB]

"Dollar in the red as Jackson Hole looms
Key developments that should provide more direction to U.S. markets later on Monday:
Federal Reserve Governor Christopher Waller set to speak
U.S. to sell 13-, 26-week bills
U.S. corporate earnings: Estee Lauder, Palo Alto Networks

[12SPX]

Got all my expiration cycle data done and its looking very probable that we could see a down September cycle or at the least not up very much so my calls that I sold on Friday and added to this morning are looking really good especially considering that call options are priced to the moon once again as everyone thinks 1% moves will occur every day and I highly doubt were going to be up over +100% for the year.  Holding my short at 5525 as I smoothed it out.  Figured we would see a rally last week but that was a little over the top with no volatility so I would expect at least some volatility to hit sometime this week.  Having this strong of a rebound doesn't reveal a healthy market in the making in my view.  As I always say we need to see a stair step advance to keep it healthy otherwise your setting yourself up for another fall.  Should be an interesting week!! 

[dTraderB]

A daytraders' dream market today.
Added 2 each SPY & QQQ PUTS. Very aggressive
Long trades in nq & es 1m charts.

Will close another 10 to 15% of NVDA LONG if above 130

Holding all other longs

Will close 1 each es, nq long above 5615, 19800
Holding 2 each short es, nq now.

Edited by dTraderB, 19 August 2024 - 01:04 PM.

[dTraderB]

Any bears still ALIVE & KICKING in this rally? Yeah, still a few, but still not any major indications of a top. ES 5615-30 is a fairly strong resistance zobe.

[12SPX]

I haven't had that much on as I knew we'd rally but not this much, now averaging 5553

[dTraderB]

Largest NET SHORT POSITION since previous ATH. Holding all LONGS, ADDING SHORTS, almost totally daytrading.

"S&P 500 hunting cloud nine

Key developments that should provide more direction to U.S. markets later on Tuesday:
Canada July CPI
Federal Reserve Bank of Atlanta President Raphael Bostic speaks

[12SPX]

Smoothing out my short and adding quite a bit overnight as we continued to move up as I think were approaching a break time, average short 5567.

[dTraderB]

Nq long 19805
Es long 5623.5