It Takes Just One Day to Bring the S&P Back to Life

Nvidia fuels a huge rebound in tech

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Our View

On July 25th, the ES reached a low of 5433.25 and then retested this low on Tuesday at 5432.50. After Microsoft reported earnings, it fell 50 points to a new low of 5432.25, then rallied to 5588.50 yesterday, marking a gain of 156.25 points in 21 hours.

For its part, the Nasdaq hit a low of 18,883.25 on July 30, rallied to a high of 19,390.50, and then sold off to a new low of 18,725 on Tuesday at 3:30. It then rallied to 19,657.75 yesterday, resulting in a 932.75-point rally in less than 24 hours.

Like I mentioned on my Twitter live stream, we haven’t seen this level of intra-day swings since March 2020, when the COVID-19 pandemic began. 

After an 10.7% drop in the Nasdaq (NQ) and Nvidia falling 25% over the last 15 trading days, the chipmaker experienced its single-largest gain in market cap ever. At the start of the Great Rotation on July 10, NVDA traded above $134.91 before dropping to $102.65 on July 30 at ~1:00, a total loss of $32.26 or just over 25% over 15 sessions, wiping out nearly $800 billion in market cap in that span. 

Yesterday, NVDA gained 13% and added $329 billion in market cap in a single day — a record — with an additional 4% gain in the after-market up to $121.49. This was a rise of $18.84 on the day, just $13.52 off its high.

MiM and Daily Recap

The ES traded up to 5547.75 at 9:14 AM on Globex and opened at 5543.25. After the open, the ES sold off to 5333.00 at 9:35, rallied to 5545.00, pulled back to a new low of 5528.75 at 9:45, and then surged to 5566.75 at 10:39. After this push, the ES pulled back to 5549.75, then rallied to the high of the day at 5571.00 at 11:34. It then traded down to 5556.25 at 12:00, rallied to another lower high of 5564.75 at 12:04, and then sold off to 5556.50. The ES rallied to 5662.75 before a selling program pushed it down to 5553.25 going into 1:00.

After this low, the ES rallied back to 5563.50 at 1:10, then dropped to 5339.50 as some Fed headlines hit the tape, with 90k ES traded from high to low. Following this low, the ES quickly recovered, rallied to 5561.25, dropped back to 5547.00, and then rallied to 5576.25 at 3:45. After this push, the ES sold off to 5561.75 at 3:48 and traded 5564.50 as the 3:50 cash imbalance showed $2.2 billion to sell. It then rallied to 5573.25, sold off to 5550.50 at 3:54, and rallied to 5565.75 before trading at 5558.25 on the 4:00 cash close.

After 4:00, the ES started to bid up as META reported blowout earnings and rallied over 10%, pushing the ES all the way up to 5582.75 before selling off to 5568.50 and settling at 5570.25, up 97.75 points or +1.79%. The NQ settled at 19,581.75, up a substantial 645 points or +3.41%. The 10-year note yield rose to 4.107% on Wednesday, marking its biggest monthly decline of 2024 following the Fed’s decision.

In the end, I have one thing to say: MrTopStep Trading Rules 101 — It takes days and weeks to knock the ES down and only one to bring it back. I wrote that rule 25 years ago. In terms of the ES’s overall tone, it was rock solid until late in the day. In terms of the ES’s overall trade, volume was high with 292k traded on Globex and 1.79 million traded on the day session for a total of 2.082 million contracts traded.

Technical Edge

Guest Post — Dan at GTC Traders

Obsession with Rate Cuts 

As of late, markets seem to be obsessed with an eagerness I have not seen in some time.  

While the market may eventually get what it seems to be demanding, we are at somewhat of a loss to understand this obsession.  If you have not followed Danny Dayan on X / Twitter ( @DannyDayan5 ), I would recommend the follow.  As he has been pointing out the very thing we have been mentioning to our members.

In fact, we were somewhat encouraged by the Chairman’s statements yesterday; pushing back on the idea that we have seen a ‘massive slowdown’ in the economy.

We have not.

We have seen some softening.  But softening is a far cry from an actual slowdown. GDP for the last 2 years remains elevated: 

United States Real GDP

So it doesn’t really seem as if there is much of a need of a rate cut to spur the economy when looking at GDP.  For the last two years we have been steadily rising, and are currently above 2018 levels. What exactly would cutting t he rate achieve for the economy as a whole, with GDP elevated above 2017 and 2018 levels.

We have seen some pain in the housing market?

But again, here we agree with the Fed Chairman.  Taking a neutral, unbiased look at housing?  We feel that housing needs to see some pain.  In my particular area, buyers were buying houses, lifting past the offer … sight unseen.

We feel that is a market, that needs to cool off.

And need we even begin to mention the the levels of any stock market index, even with the recent correction?

So again we ask … why the obsession with cutting the rate?

Rates normalized in this range throughout the 1990’s, and the economy did more than fine …

One of the big factors we have been paying attention to, is unemployment.  

When the Federal Reserve was forced to hike rate from 1978 to 1983, you saw a massive rise in unemployment …

But now?  Historically unemployment is still at historically low levels, and nowhere near the pain that we saw in the 1970’s …

We are remarkably, historically subdued when it comes to the unemployment rate, looking at the last 70 years.

So we ask?  Again … what is the obsession with cutting the rate?  ZIRP led to many bad habits by market participants.  An economy can normalize with higher interest rates, and we would argue … that this is even somewhat healthy.  

Who knows, we may have a rate cut by the end of this year.

But we are at a complete loss to understand the obsession.

Stay safe, and trade well …

Economic Calendar

For a more complete Economic Calendar see: https://mrtopstep.com/economic-calendar/

Disclaimer: Charts and analysis are for discussion and education purposes only. I am not a financial advisor, do not give financial advice and am not recommending the buying or selling of any security.

Remember: Not all setups will trigger. Not all setups will be profitable. Not all setups should be taken. These are simply the setups that I have put together for years on my own and what I watch as part of my own “game plan” coming into each day. Good luck!