Hi all,

CPI data came out Wednesday morning and showed a slight unexpected uptick in inflation. However, the PPI data that was released Thursday was a little lower. The net result was that traders now expect a ¼ to ½ percentage interest rate cut.

In fact, as of the weekend, the Fed watch tool has the odds at 50:50 for a small cut versus a bigger cut. I am very unsure how the market will react to one outcome versus the other. Will a ½ cut spook the markets (the Fed thinks things are worse than expected) or will the larger cut spur the markets to new highs? Will a ¼ point cut disappoint? We will have to wait and see.

The week prior, the market sold off hard on a weakening labor market and general concerns about the September effect. This led to the biggest one-week decline in the SPY for 2024. This last week we got the biggest one-week gain for the year – talk about volatility.

This Wednesday afternoon should be interesting with the rate decision, and then Fed chair Powell should speak at 2:30. Hold on to your hats.

Recap Video

Watch the Recap on YouTube

Sectors in Play Last Week

1. Technology and Consumer Discretionary were big gainers this week.
2. Energy was the only sector that lost ground by a fraction.

Key Levels for this Week

1. DOW (41,394) – support 40,000 and resistance 41,600
2. QQQ (475) – support 448 and resistance 480
3. SPY (562) – support 540 and resistance 565
4. IWM (217) – support 208 and resistance 220

What to Watch for this Week

• Monday – 8:30 Manufacturing Survey
• Tuesday – 8:30 Retail sales; 9:15 Industrial Production and Capacity Utilization; 10:00 Business Inventories and Builder Confidence
• Wednesday – 8:30 Housing starts and permits; 2:00 Fed Rate Hike Decision; 2:30 Fed Powell Press Conference
• Thursday –8:30 Jobless claims; 10:00 Initial Home Sales and Economic Indicators
• Friday – nada

Earnings this week

• Wed – GIS pre
• Thurs – DRI pre and FDX, LEN post
• Friday – VFS

Positions and Trades Last Week

• TIL – Risky trade Friday. Holding a small position that is left over.
• AMRK – Long from the watch list last week. Breaking higher now.
• CMG – Long. Looking for a break higher
• GDX – sold.
• PLTR – long – it broke out this week, but we are in an area where there will likely be some big resistance. Will trim more next week.
• SPXL – From last weeks watch list. Was expecting a bounce back and we got it.
• UVXY – sold the remaining position early in week.

Tracking for Potential Trades

Wednesday is going to be very volatile, will probably lighten positions then sitting back and watch.

• LCRX – Possible double bottom but expensive stock…could use an option strategy like a vertical or risk reversal.
• ORCL - $175 established high. It likely has good support around $152 and maybe a range bound between these levels.
• NFLX – Continues to look strong. Break out of $700 possible but watch out for Wed volatility.
• UVXY – A possible trader for an increase in volatility if it happens on Wed news.

 

Note: These are investments I am in or watching however, they may not be suitable for all investors. The author of this email is NOT an investment advisory service, a registered investment advisor, or a broker-dealer and I do NOT undertake to advise clients or recipients of this email on which securities they should buy or sell for themselves. This email is provided for information purposes only and traders should always consult with their licensed financial and tax advisors to determine the suitability of any investment.