Daily Commentary: June 10, 2024

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Market Not Likely To Move

Posted by Pete Stolcers on June 10

Institutions are waiting for the next catalyst.

PRE-OPEN MARKET COMMENTS MONDAY – Last week we got a healthy dose of economic news and it did not move the needle. Earnings season has ended so that will not be a catalyst. The focus this week will be on the CPI and FOMC this week. Both will be released Wednesday.

The market has not moved much since March and it is likely to stay in a trading range this summer. The candle bodies are tiny and the volume is light. The economic soft patch in April was just that. ISM services snapped right back into expansion territory and 275K jobs were created in May. Those releases improved considerably from the April readings. The Fed will not have to ease and I doubt they roll back QT this week. Inflation has gradually been easing, but it has been very stubborn. That will keep the Fed on the sidelines. I don’t believe we will see a big net move from the news. Of course the market will have an initial reaction, but it is likely to retrace.

The momentum has stalled and we had a dip in April. The bounce was wimpy and the market barely made a new all-time high before hitting resistance. We’ve seen two-sided action. Buyers and sellers are paired off. At best, the market could float higher on very light volume. If we see that, the move would be vulnerable to a quick dip.

My market bias is neutral this summer. When the market is near the top of the range, favor selling OTM call spreads on weak stocks. When the market is at the lower end of the range, sell OTM bullish put spreads on strong stocks. Try to take advantage of time decay. Distance yourself from the action and keep your size small.

Day traders can trade from either side. If the market gaps up to a new relative high, watch for gap reversals. If we get one, there could be selling pressure the next few days. When the market dips and it finds technical support, look for up gap reversals. There could be follow through buying for a few days. Try to find one or two really good stocks each day and set passive targets. The stocks you are trading need to have heavy volume or they will not make sustained moves.

If the economic releases are stable at this level (mixed but solid) and if inflation remains stubborn, the market could stay in this general range through the summer and perhaps even until the election.

Support is at $530 and resistance is at the all-time high.

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