Daily Commentary: January 23, 2024

Auto Post1Option Commentary

The Odds of a Rally Are Higher Today

Posted by Pete Stolcers on January 23

Yesterday the market rested after a big run. Earnings season is cranking up and there was some good overnight news.

PRE-OPEN MARKET COMMENTS TUESDAY – The market made a new all-time high Friday. That lasted more than 500 days and it was the 6th longest streak ever. Earnings releases will increase this week, but the mega cap tech stocks are still a week away.

The market had a day of rest after a big move and that increases the odds that we will see follow through buying today.

Global markets were mixed with the exception of China. They are considering a market rescue package of $287 billion. For today, this is good news. Long-term it is a band-aid and prices will go where they need to until the underlying issues are resolved.

I would be fairly aggressive with longs this week, but I would start paring back exposure before the FOMC statement. That coincides with mega cap tech earnings. If the market rallies well above $490 in the next week, we could be getting a little frothy and we are likely to see some profit taking. That is not enough to change our bullish outlook, but it is enough to throttle back on our bullish exposure.

The ECB has been vocal about not raising rates before summer when they spoke in Davos. They have a meeting Thursday. The comments should be more hawkish than the market would like, but inline with expectations.

The Fed is going to splash cold water on the market. The rate cuts are not coming as soon as the market would like.

You should expect a choppy stair-step rally. Right now the iron is hot so you should strike. Then exit into strength and wait for the next dip. This plane is still flying safely on one engine (the US), but the others (China and the EU) are sputtering.  

The market has given back most of its overnight gains and the open will be relatively flat. Yesterday we probed for support and the market closed above the high from Friday. 1OP is starting the day in a deep trough and we should get an early bullish cycle. As the bearish cycle completes, I want to see very little (if any) pullback and I am expecting this. We have some overnight news that should support the market and we are one day further into earnings season. The market has had a day to digest gains and to confirm support.

I am more bullish today than I was yesterday and I would look for early support and an opportunity to get long. Little to no drop and nice consecutive green candles and an orderly grind higher during the bullish cycle will confirm that buyers are interested.

Support is at SPY $480 and resistance is at SPY $490 and $500

Live Trading

Open an Account

Paper Trading