Still a Tricky Environment to Navigate
JPM’s Jamie Dimon is concerned.
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Our View
I get a lot of bank reports, most of which I do not read but I think JPMorgan CEO Jamie Dimon is one of the most influential bankers in the world — and the PitBull agrees. He said Dimon cannot be ignored and that he was wrong on Bitcoin, but has not been wrong much overall.
The PitBull also said he expects that things will continue to be a choppy mess and that the first leg of the 2024 rally is broken. He added that May to October are historically slower. The PitBull and I have also talked about the declines in the 1970’s. The bear market that began in January 1973 was associated with what became known as the “oil shock recession.” I actually remember going to the gas station and only being able to get half a tank of gas.
During an appearance at the Economic Club of New York on Tuesday, Dimon said he is concerned the US economy could be in for a repeat of the problems that hampered the country during the 1970s. “Yes, I think there’s a chance that can happen again,” he said.
He noted that the economy in that troubled decade was constrained by stagflation — a combination of low growth and high inflation — and Dimon said such a risk exists again. I have to admit that while I still think the market will rally, I don’t think the head of JPMorgan isn’t in the know.
Our Lean
Things get a little more serious on the economic and earnings front today and tomorrow. The first-quarter GDP numbers are due for release on Thursday morning, while the core personal consumption expenditures price index (PCE) — the Federal Reserve’s preferred inflation gauge — is due out Friday.
According to FactSet, corporate earnings have so far surpassed Wall Street estimates. More than 25% of the names in the S&P 500 have reported earnings thus far. Of those companies, 79% have beaten earnings forecasts, and today Microsoft, Google, and Intel report. As long as the prospects of higher inflation and higher rates remain, tech earnings could be impacted.
So, is the decline over? I think this is a two-sided coin; there are going to be selloffs and rallies. Do I think the ES is going back up to the highs right now? No, but I can’t rule that out either.
Our Lean: I always get concerned about the CPI and PCE and I’m also concerned about the tech earnings. Ideally, if the ES has high Globex volume and the futures open down hard, my lean would be to try and buy the early weakness but I also want to sell the dead-cat bounces or sharply higher opens. I could be wrong but the ES is only ~144 points off the most recent low.
MrTopStep Levels:
MiM and Daily Recap
ES recap
The ES traded up to 5128.75 at 2:00 am, sold off down to 5106.50 at 6:00 am, rallied up to a lower high at 5124.75 at 9:00 am, and opened Wednesday’s regular session at 5116.75. After the open, the ES traded 5119.25, sold off down to 5100.00, and then rallied up to 5121.25 at 9:40, pulled back to 5118.25, rallied up to 5124.00, pulled back to 5117.75 and then traded up to the high of the day at 5124.75 at 9:55.
After the high, the ES sold off down to 5110.75, rallied up to a lower high at 5122.50 at 10:15 and it was that high that set up a selloff down to 5091.25 at 11:30. From there, it popped back up to 5102.25, sold off down to a 5086.75 double bottom at 12:00, rallied up to the 5095.25 area and then sold off down to the low of the day at 5082.00 — 42.75 points off the low. After the low, the ES popped up to 5090.50 at 12:55, sold off 4 points, and then stutter-stepped its way back up to a 5116.50 double top at 5116.50 at 2:00. From there, the ES sold back off down to 5095.25 at 2:35 and then traded back up to 5103.50 at 2:45 and that’s when I posted this:
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IMPRO : Dboy : (2:45:07 PM) : slow walk. You can’t sell that
The ES dipped to 5093.00 and then ripped up to 5112.75 at 3:30. After the rally, the ES pulled back to the VWAP at 5106.50 at 3:40 and traded 5108.50 as the 3:50 cash imbalance showed $1.1 billion for sale and then rallied up to 5113.00 and traded 5105.75 on the 4:00 cash close. After the close, Meta’s Q1 earnings beat but the stock fell on a disappointing Q2 revenue outlook. The ES sold off down to 5082.00 at 4:10, popped up to 5090.00 at 5072.25 at 4:30, up-ticked and did a small back-and-fill, traded 5082.20 and settled at 5079.75, down 32.50 or -0.64%. The NQ settled at 17,507.25, down 153.5 points or -0.87% and the yield on the 10-year note rose to 4.652% — up from 4.597% the prior session — gold settled at $2,328.90, down 13.2 or -0.56%, and NVDA settled at 796.77, down 27.46 or -3.33% and fell another $10.00 in the aftermarket.
In the end, the ES was short-term overextended. In terms of the ES’s overall tone, it was a sell-the-rallies day early and a short-covering rally in front of META’s earnings. In terms of the ES’s overall trade, volume was steady: 237k ES traded on Globex and 1.220 million traded on the day session for a total of 1.457 million contracts traded.
Technical Edge
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NYSE Breadth: 46% Upside Volume
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Nasdaq Breadth: 50% Upside Volume
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Advance/Decline: 41% Advance
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VIX: ~16
Guest Post — Tick Titan Trading Room
Hey Traders!
Quite the price action this past week and a half! Seems that all the sour news that is hitting us from every angle is finally coming home to roost in the Markets. In my opinion, it is long overdue. Having said that, it remains to be seen what this current Administration will do to stop further downside action – it is an election year, and as such, we all know that they like the stock markets to be bright and shiny!
Unfortunately, when I look at a Daily Chart on the NQ it points to possible further downside action. Should price close below 17481.75, I would be looking to short below there. As I always say, do not get married to any single trade in these markets. There is too much instability occurring, so trade responsibly and never get married to 1 single trade. If price does not breach that price by Friday at close, this trade will be negated.
NQ
There is also the potential for further downside on a Daily YM chart. I will be looking to sell below 38520. The same rules apply for this trade; do not get married to any 1 position. If price does not breach this area by the close on Friday, this trade will be negated.
YM
It is difficult to foretell how far any one trade will go. My advice is this: If a trade is triggered, lock in profits at a specific price and then trail. We will be following these trades in my live trading room, and I will advise as I see fit – both of these trades could move down to their previous swing lows, or they could trigger and then only provide us with small profits. We just don’t know until we are in the trade – I will manage as I see fit given momentum and volatility.
Please feel free to join us! Here are the links for you:
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!
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