Daily Commentary: December 20, 2024

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Spooky “Triple Witch”

Posted by Pete Stolcers on December 20
www.oneoption.com

There’s a reason they call this triple witching and not triple scoop of ice cream with a cherry on top.

PRE-OPEN MARKET COMMENTS FRIDAY – It has been a nasty triple witch and the FOMC statement sparked some selling. Politicians aren’t doing the market any favors and it looks like we are going to have a government shutdown. The market dropped overnight and we are likely to see more selling. I don’t believe triple witching will have much of an impact since most of those positions have been “rolled”.

Yesterday the market had a very meager attempt at a bounce early in the day. That move never gained traction. If buyers were interested, they would have scooped this drop. They didn’t and that is a sign of selling pressure. When we get a long red candle, we want to preserve the middle of the candle. Mission accomplished. An even more convincing result would be a close near the close of the long red candle. That would be a sign that buyers could not even retrace any of that long red candle. That’s what we got.

There was a small bounce when the PCE core was released, but that was meaningless as far as I’m concerned.

Republicans are steadfast. They are not going to pass the first bill drafted by Democrats. Democrats are steadfast and they are not going to sign the new bill drafted by Republicans. This is a standoff and the chances if it being resolved today are next to nil. This leaves investors uneasy heading into the weekend.

A government shut down is not the end of the world. I’ve been through a few of these and they are benign. Politicians will do some grandstanding and it will get resolved. Even if this drags out for a month, it won’t have a long term impact.

Know that a gap and go down is likely. If we get a bounce it will give you a chance to look for weakness. I wouldn’t load up on shorts. Only day trade from the short side. I CAN’T STRESS THIS ENOUGH!

Year end seasonal strength is not something you want to fade. Stick to day trading.

I’ll watch the price action. Let’s see where we go.

Support is the 100-day MA and AVWAPQ is resistance.

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