OP Wire 5/6 (OP – Lite)


U.S. Stock Futures Edge Higher Amid Rate Cut Speculation

U.S. stock futures inched higher today as traders mulled over the possibility of Federal Reserve interest rate cuts later this year, spurred by the latest jobs report.

Following a session where major averages all saw gains, the U.S. employment figures for April hinted at potential cooling in the economy. With 175,000 jobs added, falling short of estimates, and a slight uptick in the jobless rate to 3.9%, analysts are noting a rare occurrence of all report components underperforming expectations. ING analysts commented that while the report isn’t dire, it signals a deviation from the norm.

Market sentiment is shifting towards earlier Fed rate cuts, with expectations for an initial 25 basis point reduction moved up to September from November in response to Friday’s data.

Fed Officials’ Speeches in Focus

This week, investors will closely monitor speeches by several Fed policymakers for insights into the trajectory of interest rates. New York Fed President John Williams and Richmond Fed President Thomas Barkin are set to speak on Monday, followed by Minneapolis Fed President Neel Kashkari and others later in the week.

Chair Jerome Powell’s recent acknowledgment of stagnation in inflation battle has primed markets for rate adjustments. Despite a tightening cycle driving rates to two-decade highs, Powell remains optimistic about lower borrowing costs later this year.

Earnings Season and Small Cap Concerns

Walt Disney, Wynn Resorts, and Akamai Technologies headline the upcoming earnings reports, with smaller companies like Bellring Brands and Light & Wonder also in focus. Small caps have lagged in 2024, partly due to Fed’s hawkish stance affecting debt financing and consumer spending.

Chinese Services Sector Resilience

China’s services sector saw a slight easing in April but maintained a steady pace overall, as per the Caixin PMI report. While the reading stood at 52.5, indicating resilience fueled by stimulus and improving external demand, analysts are cautiously optimistic about sustained recovery.

Oil Prices Trend Upward

Oil prices climbed in European trade after Saudi Arabia’s announcement of increased crude prices for June, signaling positive market sentiment amid evolving global dynamics.

As markets navigate the Fed’s rate policy, economic indicators, and geopolitical developments, investors are bracing for potential shifts in sentiment and trading patterns.

SPX/SPY-

Last week, the main focus will be on how price trades versus the prior week’s inside bar, with a specific focus on the 5120 level of interest. Was last week’s bounce simply a short-covering rally into the 50% retracement level, enabling sellers to reload for the next leg lower? Buyers will be looking for an upside break of the inside week, which would target 5185, 5205, and 5260.”5120 proved to be an effective level to monitor, as once this level broke down on Tuesday, sellers forced a an 85 point move lower, nearly testing the downside weekly level of interest at 5030. That said, buyers were successful in the upside break of the inside week, with a weekly high established on Friday at 5166.75.

Price has potentially established a change in character with the move through last week’s high, as indicated by the daily timeframe structure. Can buyers sustain Friday’s move higher? That is the main focus for this week, and specifically how price trades versus the 5150 level of interest. If buyers can continue to show acceptance above this level, price can show a retest of the 5195 (prior breakdown point), with potential continuation into 5230 and 5270. If price fails to hold 5150, watch for a retest into 5100, 5040, and potentially 5020.

Upside levels of interest: 5195, 5230, 5270

Downside levels of interest: 5100, 5040, 5020

Notable Economic Data

  • All week: Fed Speak 
  • Tuesday: 3Y Auction
  • Wednesday: 10Y auction
  • Thursday: Jobless claims, 30Y auction
    This weeks long targets – $SBUX, $NLST, $BABA, $DIS, $WMT, and $AAPL if it takes a hit after BRK 13% sell. 

Perception is Key: Turning Challenges into Opportunities

In the world of trading, as in life, our perception shapes our reality. How we view challenges and setbacks can determine our state of mind and ultimately, our success. Do we see them as obstacles to overcome, or as injustices holding us back?

It’s easy to fall into negative mental loops when faced with losses or tough trading sessions. Blaming external factors like the market may seem like the natural response. However, what if we shifted our perspective and viewed these challenges as opportunities for growth?

Instead of dwelling on the unfairness of the market, successful traders use setbacks as learning experiences. Every loss, every mistake, is a chance to analyze and improve their trading strategy. It’s a mindset that separates the average from the exceptional.

Our perception shapes our reality. If we view difficulties as roadblocks, they will hold us back. But if we see them as stepping stones to success, they become opportunities to evolve and grow.

So the next time you face a setback in your trading journey, ask yourself: Will I let this defeat me, or will I use it as fuel to become better? The choice is yours.🙏🚀

See you all in chat.

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