Daily Commentary: January 30, 2024

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Take Profits Into Market Strength!

Posted by Pete Stolcers on January 30

I’m not bearish. After a big run it is wise to take gains at the all-time high with major news pending. We will look to re-enter. Here’s the game plan.

PRE-OPEN MARKET COMMENTS TUESDAY – There is a lot of news pending this week. The market had a great run and I like taking profits now. I am not bearish! Great news is expected and I believe we will have an opportunity to re-enter better.

Mega cap tech earnings:

Tuesday: AMD, GOOG, MSFT

Thursday: AMZN, AAPL, META


Wednesday: ADP, FOMC

Thursday: ISM Manufacturing

Friday: Jobs Report

Here are the fundamental forces that are in play. China is weak and credit issues are surfacing. Europe just posted 0% GDP growth after a .1% decline in Q3. Stock valuations are rich at a forward P/E of 22.3. The Fed has breathing room and they will not feel any pressure to cut rates. Inflation is subsiding, job growth is strong in the US and economic growth is steady. There are no signs of credit issues in the US.

OK… what does all of that mean? The market is priced for perfection and we don’t have it. Ahead of major news after a strong run it is prudent to take profits at the all-time high. The market does not go straight up or straight down. Take gains into strength and re-enter on the next dip when support is established. That is the mindset you need to be in.

With this backdrop, why am I so bullish? The price action from the October low has been incredibly strong. There have barely been any dips. That tells me that we still have upside. The US stock market is benefiting from the weak global backdrop and international money is flowing in.

Swing traders should lock in some gains.

Day traders should expect a dull day with an upward bias into AMD, GOOG and MSFT earnings. Shorts are going to be very cautious ahead of major news at an all-time high and the selling pressure is light. This explains the light volume rally.

China was weak overnight, but the rest of the overseas markets were mixed and they won’t have much of an impact today.

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

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