[OFFICIAL] S&P 500 Market Watch

[aurvandil]

Monday 22 Jul 24

The market extended its decline to 5542. As noted last Friday, it's crucial to be prepared for the possibility that the bottom is not yet in, and the market could continue to test lower levels. The next key level to watch below is 5502.75.

Over the weekend, news broke that President Biden will not seek re-election. This had little substantive impact when the market reopened. Trading volume was not significantly heavy, and while the market is slightly higher, it appears to be more of a typical pullback after three days of losses rather than a reaction to political developments.

Looking ahead, major event risks remain with Tuesday's earnings reports from Tesla, Google, and Microsoft after market close. The market is heavily hedged following Netflix's gloomy guidance. If earnings meet expectations, a good bounce is anticipated.

 

[aurvandil]

Tuesday 23 Jul 24

The downtrend that began on Wednesday has effectively ended, with the market pulling back to test 5615.50. Although the test failed, the market finished above 5600. The current range is defined with a top at 5721.25 and a bottom at 5542. With Tesla, Microsoft, and Google earnings coming after Tuesday's close, both top and bottom are not secure.

In Treasuries, there's been a quiet repricing of rate cut odds. The Fed is still expected to start cutting rates in September, but the likelihood of a second cut in November has dropped to 50-50, with expectations now leaning toward December. The third cut is now anticipated in January 2025. This shift likely contributed to the sell-off starting Wednesday.

Looking ahead, the setup appears promising for those on the long side of the trade as we approach the Tesla, Microsoft, and Google earnings event. With an elevated VIX and a recent sell off, the market seems well-hedged, suggesting limited downside if earnings disappoint and substantial upside if they exceed expectations.

 

[DevilPlate]

got some truth that US Fed keep delaying rate cut because they wana cause currency and asset deflation in other countries and then use their strong dollar to bargain hunt?

 

[aurvandil]

got some truth that US Fed keep delaying rate cut because they wana cause currency and asset deflation in other countries and then use their strong dollar to bargain hunt?

That is not likely to be the reason. Unlike Singapore, US does not have a sovereign wealth fund. There is thus no institution to craft a policy like that for.

More likely reason is that US economy is still doing very well. Latest FED forecast has GDP coming in at 2.7%. Unemployment rate is rising not because economy is falling into recession but because their labor participation is increasing. This is why for 3 NFP, we have had above expectations job creation but rising unemployment as well.

Everything points to a goldilocks economy that does not need 3 rate cuts in quick succession.

 

[aurvandil]

Wednesday 24 Jul 24

Things are not looking so good today. The market gap down on reopen following earnings from Tesla and Alphabet (correction for earlier posts: Microsoft earnings should be on July 30). The order flow for the gap down was odd. Instead of a large number of sell orders, the gap down appeared to occur on bids being pulled. Market went sideways on thin volume and then spiked down at 12:15 pm. The spike down appeared to occur on a sell order of about 6000 contracts.

The market seems set to test the 5542 low set on Friday and a breach appears likely. The next significant level below is 5502.75 from July 2, 2024. This level is well tested and should provide some short term support.

 

[wutawa]

premarket looks very bad for me. visa, google and msft down...

 

[sohguanh]

premarket looks very bad for me. visa, google and msft down...

Last week was bad this week so far like not getting any better. As long as you diversify enough should be ok

 

[highsulphur]

Jul gains are almost gone

woohoo!

 

[DevilPlate]

Jul gains are almost gone

woohoo!

Maybe got chance to go back to April 24 price level……then i will add more

 

[Mephist0pheLes]

yeah. 2022 thru early 2023 was one of the toughest year for any long term investors who kept seeing their portfolio declining. However they were rewarded sharply by staying invested when the market turned sharply end 2023 which no one could have predicted (hence get in in time).

that's the year i pump in the most tho, every 5% drop i jus throw in some extra money above my regular DCA.

but i do see ppl with those sentiments, they keep telling other ppl dont buy during the 2022 bottom, sibei funny.

 

[jinsatkilife]

Wednesday 24 Jul 24

Things are not looking so good today. The market gap down on reopen following earnings from Tesla and Alphabet (correction for earlier posts: Microsoft earnings should be on July 30). The order flow for the gap down was odd. Instead of a large number of sell orders, the gap down appeared to occur on bids being pulled. Market went sideways on thin volume and then spiked down at 12:15 pm. The spike down appeared to occur on a sell order of about 6000 contracts.

The market seems set to test the 5542 low set on Friday and a breach appears likely. The next significant level below is 5502.75 from July 2, 2024. This level is well tested and should provide some short term support.

What causes the opening auction to gap down? Is this common and have u seen this big of a gap down before?

Any earnings news should have been factored in before the after hour market close

Btw anyone know what's the best way to structure a trade betting on rate cut in July?

Is it options on interest rate future?

 

[aurvandil]

What causes the opening auction to gap down? Is this common and have u seen this big of a gap down before?

It is a fairly small gap down. Looking at the order flow, looks like there was big player (s) who got bearish for whatever reason and wanted to get out. The order flow attracted attention and everyone joined in. It trapped a lot of longs who were positioned for new ATH. When the 5540 broke, everyone scrambled and it became a rout.

Not sure at this point in time what was reason behind the initial bearishness. A lot of nervousness as it could be because of leaked weakness of next week's Mag 7 earnings or selective guidance by the FED on next week's FOMC.

If next week passes without anything adverse, expectation is for a sharp bounce back to the ATH price region.

 

[aurvandil]

Friday 26 Jul 24

There is a lot of fear and hysteria right now that the AI "bubble" has burst and that we are heading for a dot com style crash.

When a stock is making ATH, it is normal for CEOs to issue gloomy guidance to rein in expectations and get easier KPI for year end bonus. We saw this earlier when Netflix issued guidance.

When the stock is crashing, it is rare for CEOs to issue gloomy guidance and crash it even more. To do so would encourage disgruntled shareholders to band together and start looking for a replacement. The more common practice is to issue optimistic guidance regardless of what earnings might be.

Expectation is for the remaining Mag 7 to do this next week. FED is also likely to be dovish. Current FOMC members are in blackout so they cannot release any public guidance. If they want to say anything, they will get some prominent former FED official to come out and say it. We have seen them message in the past 2 days economy is not headed for a hard landing and interest rate cuts are on the way. Market is now back to pricing 3 rate cuts by end of year.

Hopeful therefore that we make a bottom here and bounce next week after all the event risk gets out of the way.

 

[aurvandil]

Tuesday 30 Jul 24

Like Friday, Monday was an inside day with a lower high and higher low. Two consecutive inside days are rare and highlight the significant uncertainty due to multiple event risks this week. The key level above is 5533.25, while the key level below is 5432.50. The market is approaching these multiple event risks near the halfback at 5482.75. Over the past two trading days, there has been little to do except wait, adjust positions, and be patient.

Historically, such scenarios often turn out better than the market fears. If this pattern holds, we can expect a rally that pushes past 5533.25 and moves on to test the next level above at 5629.75.

 

[highsulphur]

looks like the correction will extend a bit further

 

[nqscalper]

relief rally tonight? or bottom is in?

 

[aurvandil]

Thursday 01 Aug 24

Hope everyone managed to do well and earn some cai png money from the recent market dip. The bottom is now secure at 5432.50, with the market breaking past 5581.50 and trading just below the SoC of the gap down from Tesla and Google earnings.

A lot happened yesterday. The Bank of Japan raised rates by a very modest 15 basis points, a hike much smaller than expected, with two dissenting views against the hike. This dissent is significant as public dissent by committee members against the BOJ Governor is very rare. This suggests that it might not be so easy for Ueda to push through further rate hikes for Japan.

Later in the evening, the FOMC announced its rate decision. While there was no rate cut, there was very firm guidance by Powell that the rate cut cycle will begin in September. The market is now pricing in five cuts from September 2024 to March 2025. If U.S. growth continues to hold up well, this sets the stage for a strong sustained bull run that could bring the S&P over 6000 by year's end.

After the FOMC, Meta released its earnings, which were well received. The guidance from both Microsoft and Meta have been predictably upbeat. Expectations are that we will get similarly positive guidance for Apple and Amazon earnings.

On Friday, we have the non-farm payrolls report. The ADP release yesterday was unexpectedly weak. It is not known how much of this weakness will be reflected in the NFP number due to significant bias resulting from the difference in coverage. Based on the earlier JOLTS numbers, the expectation is for a continuation of last month's trend where job creation exceeded expectations even as unemployment crept up. This is due to the continued increase in the labor force participation rate.

 

[aurvandil]

Friday 02 Aug 24

There was a fair bit of panic among retail traders over the sharp sell-off yesterday, driven by higher-than-expected unemployment claim numbers and weaker-than-expected manufacturing PMI numbers. This followed significantly weaker-than-expected ADP numbers, fueling the narrative that the Fed has over-tightened and the U.S. is headed for a hard landing into a deep recession.

The order flow suggest that there is heavy hedging for tonight's NFP number, fearing it will show job creation below 100k and a sharp spike in unemployment. These fears are amplified by the election cycle with one party constantly portraying the US economy being on the verge of complete collapse.

As noted previously, market has a tendency to over react. While the NFP might indeed indicate a weaker labor market, it is unlikely to be as severe as feared. If this is the case, we should see a sharp V-shaped rebound after the NFP is released.

 

[aurvandil]

Saturday 03 Aug 24

The market had a fairly negative reaction to the weak NFP number. Typically, the NFP employment change number is 50k to 100k above the ADP employment change number, so it was stunning to see the NFP come in below the ADP figure. Unemployment rose to 4.3%, which is still low by historical standards. The narrative is that while the U.S. economy is not in a recession yet, it is rapidly heading towards one in a hard landing. These fears are being fanned by the election cycle, with the GOP election messaging that the U.S. is on the verge of collapse.

Rightly or wrongly, the Fed is seen as being behind the curve again. This sentiment is exacerbated by the Fed's calendar, as their annual Jackson Hole retreat is in August, meaning there is no FOMC meeting until September 18. The market is pricing in a massive 50 basis points cut at the September meeting. The Fed can, of course, call an emergency meeting at any time and implement an emergency rate cut, which could spook the market even more.

We need to be mentally prepared for the possibility of a Black Monday-type event when the market reopens. The yen remains open for trading in thin markets over the weekend, and it continues to spike. On Monday's reopen, the Nikkei will likely gap down in response to the sharp decline in the U.S. market and further yen strength. This gap down could be unusually large as sentiment is very bad. Previously, the Japanese market had already declined sharply since BOJ Governor Ueda pushed through his 15 bps rate hike despite rare public dissent.

Later on Monday evening, the Services PMI will be released. Last month's PMI came in below expectations. If it does so again, there is a good chance it will spark further selling. In terms of price levels, the market has not found a bottom yet. The next key level below is 5270.50 from May 31. If the market breaches that, the way opens for a drop all the way back to 5028.50 from April 19.

 

[stanlawj]

Next week becareful liao

When EDMW calls for Black Monday , you know, there won't be any.

https://forums.hardwarezone.com.sg/threads/potential-black-swan-market-crash-2024.7053135/