Daily Commentary: February 06, 2024

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Here’s Why I Am Day Trading Now

Posted by Pete Stolcers on February 06
www.oneoption.com

The market has run far and the good news is behind us. Staying short-term I can catch any remaining upside while keeping my overnight risk to a minimum.

PRE-OPEN MARKET COMMENTS TUESDAY – The market has been strong and the news has been good. The economic calendar is light this week and we are half way through earnings season. I like the price action, but I feel the market will pause. These gains need to be digested and the excitement will wane.

I suggest staying in day trading mode for a couple of weeks. Stay flexible and let’s see if we get a little pullback. That dip will provide us with much needed information. If we don’t get a dip and the market holds all of the recent gains, we will know that the next leg higher will start soon and then we can initiate some swing trades.

The market is priced for perfection, but the backdrop is not perfect. Conditions in the US are excellent, but that is not the case globally. Stock valuations are stretched and the rally has been concentrated.

Bull markets open near the low and they close near the high. That price action allows us to capture the entire move without overnight risk. What about gaps up? We will miss those. That’s true, but at current levels I believe that gaps up will spark profit taking and those could result in gap reversals. Don’t chase gaps up. Gaps down like the one we had yesterday are our friend.

Keep your trades short-term for a week or so and let’s see if the gains hold.

Support is at SPY $490 and resistance is at $500.

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