Daily Commentary: June 13, 2024

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The Market Gains Held

Posted by Pete Stolcers on June 13
www.oneoption.com

Yesterday we got two key pieces of information and the market made a new all-time high.

PRE-OPEN MARKET COMMENTS THURSDAY – The market gapped higher yesterday when the CPI came in at .2% (.3% expected). The gap up held and hawkish remarks from the Fed did not spoil the rally. This morning the PPI came in at 0% and that was lower than expected (.3%). Initial jobless claims increased to 242K and that is one of the highest readings we’ve seen this year.

The Fed is not compelled to cut interest rates when economic growth is solid and when inflation is starting to wane. The market is at an all-time high and fear is low. If the economy stumbles, the Fed said that they will cut rates. Inflation no longer has them painted into a corner. This is a good backdrop for the market.

Earnings season is winding down, but we’ve had positive reactions to ORCL and AVGO.

We are headed into a news vacuum for a few weeks and that favors the current trend. I did not think we would breakout this week, but we did. The gains from yesterday held and that is a bullish sign. We could float higher on light volume the next few weeks. I am market neutral. Traders can favor the long side, but not in a major way. The market has run up 10% since the April low and the volume has been very light. That is not bearish, it just shows a low level of conviction. It also indicates that these gains can quickly be stripped away.

Favor the long side, but keep your size small. Buy dips when possible.

The high from yesterday is resistance and the low is support. We typically rest the day after a big move so keep that in mind.

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