Daily Analysis - Tuesday, 2/4/25
With Mexico and Canada tariffs delayed for one month, can optimism return to the market and some stability? Or will more breaking news continue to add fuel to the roller coaster ride?
Disclaimer
This publication and its authors are not licensed investment professionals. Nothing posted on The Shmuts blog should be construed as investment advice. Do your own research.
The Week Ahead
This week we have more Big Tech earnings with Alphabet, AMD, and Amazon set to report. We also have a lot of jobs data that will be closely watched. Buckle up!
Today - Tuesday - 2/4/25
10:00am EST - US JOLTS Job Openings (Expected: 8M)
10:00am EST - US Factory Orders MoM (Expected: -0.7%)
4:00pm EST - Alphabet Q4 2024 Earnings
4:15pm EST - AMD Q4 2024 Earnings
Wednesday - 2/5/25
8:15am EST - US ADP Employment Change (Expected: 150k)
8:30am EST - US Trade Balance (Expected: -96.75B)
9:45am EST - US S&P Services PMI Final (Expected: 52.8)
10:00am EST - US ISM Services PMI (Expected: 54.1)
Thursday - 2/6/25
8:30am EST - US Initial Jobless Claims (Expected: 212.5k)
4:00pm EST - Amazon Q4 2024 Earnings
Friday - 2/7/25
8:30am EST - US Unemployment Rate (Expected: 4.1%)
8:30am EST - US Nonfarm Payrolls (Expected: 170k)
8:30am EST - US Average Earnings YoY (Expected: 3.8%)
10:00am EST - University Michigan Sentiment Prelim (Expected: 72)
Prior Session Stats and Analysis - Monday, 2/3/25
Session Open: 21,215.50
Session High: 21,519.75
Session VAH: 21,489.75
Session POC: 21,392.25
Session VAL: 21,332.25
Session Low: 21,113.25
Session Close: 21,406.25
Session Settlement: 21,405.00
Session Range: 406.5 pts, 1626 ticks
OI Change (Prelim): +5,268 (NQ) / +8,405 (MNQ)
Prior Session Analysis
Yesterday’s session was a Normal Variation day to the upside.
The session opened with a significant gap to the downside, price auctioned lower off the open before news broke that the Mexico tariffs had been delayed a month which resulted in price immediately auctioning up in the B period.
Price action leveled off after the auction up off the Mexico news and stayed relatively flat around 21,400 until later in the session when news broke that the Canada tariffs had also been delayed a month. This caused price to auction up further and put in the high of the day above 21,500 before a slight auction down heading into the close.
In yesterday’s analysis, I spoke about this being a news-driven market right now, and yesterday was a prime example again of this. You must keep an eye on a live news feed as a day trader. Anything could happen at any time with breaking news.
Yesterday’s session was almost able to close the gap, however the prior session’s low was resistance. It will be a level to watch today, 21,533, if price is able to auction above it.
Both indexes, ES and NQ, saw considerable news business enter yesterday with 19,537 and 5,268 new contracts, respectively.
Plan for Today - Tuesday, 2/4/25
As of this writing overnight inventory is slightly long, approximately 50 points above yesterday’s close. This puts it in-balance with yesterday’s session.
With the tariffs on Mexico and Canada delayed for one month, I expect cautious optimism to return to the market backed up by the OI changes from yesterday. However, participants will be watching for the effects China’s 10% tariff will have on the economy and if that also gets delayed. Over the next month, the market will also be watching closely if the tariffs appear that they will go into effect or if a longer-term deal can be reached. Any news around tariffs will move the market substantially. The VIX is down almost 3% this morning which is a good sign for bulls.
In regards to levels, above I would look for price to auction above Friday’s low of 21,533. Additionally, if price can auction higher into Friday’s value area above 21,664 that would be a positive sign of upward momentum.
Below, price auctioning down below yesterday’s value area low of 21,333 would indicate fair value being lower than yesterday and would be a potential short opportunity. Below that a level would be yesterday’s low at 21,113.
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