Daily Commentary: June 24, 2024

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No News Is Bad News For Traders

Posted by Pete Stolcers on June 24

The market is searching for a catalyst and we are in a news vacuum.

PRE-OPEN MARKET COMMENTS – Wait for the dip and buy the dip. These should be your primary trading thoughts for the next two weeks.

The market has been floating higher on light volume and it is likely to continue that pattern. Traders who have patiently been waiting for a pullback will fret that they have “missed the move” when they see the market moving higher. Some will buy reluctantly. If they ready to exit all trades intraday at the first sign of selling, they will regret this decision. Days worth of gains can easily be stripped away in one session. Then we are likely to see follow through selling for a few more days. The depth and duration of the dip will tell us how aggressive buyers are and we need that information.

Some traders will have a “buy the dip” mentality until they actually see it. Once the selling starts, they will start to believe that a market top has formed. When it comes time to act, they will balk.

Don’t force trades. Wait for the dip and watch for a bullish engulfing candle or a bullish hammer during the pullback. At minimum we need to pullback to $537, but $533 is more likely. We need to test that breakout. If the pullback features mixed overlapping candles, we know that the selling pressure is not that heavy and that a buy will set up quickly. If the dip features long red consecutive candles, we know that the selling pressure is heavy and that we need to be more patient. That would be a sign that the dip will be a bit deeper and last longer.

Once support is established, be ready to buy. This is not a move you want to be super aggressive with so don’t load up. The move higher has come on light volume so there is not a lot of buying conviction. The bounce should be able to recapture the all-time high and that timeline takes us to earnings season. As we get closer to August, we have to proceed with caution. That is the start of seasonal weakness. The Fed will be in recess and we will be closer to the election.

Those are your marching orders for the summer. It sounds easy, but many of you will screw this up. You will buy here and try to squeeze water out of a rock. You will take a beating on those longs. When you finally puke your positions, you will not be ready to buy. You will miss that bounce. This is the best case scenario. Some of you will consider shorting. Then the market will rally and you will lose money on your shorts. I’ve been doing this a very long time, I know this is going to happen to many traders – don’t be one of them.

This week we have durable goods orders and the final look at GDP. Neither will move the market. I doubt the Presidential debate will have any impact either. Plan for light action this week.

Next week we have the 4th of July holiday on Thursday. That means many traders will take Friday off to extend the weekend. We have the jobs report that Friday so some traders will stick around. Weekly jobless claims have been ticking higher so we could see a soft employment number.

Day traders are always able to find opportunity. Just know that you have to be super selective and error on the side of not trading. If you can find a couple of high volume stocks that are breaking out, those will be your best prospects. We need nice consistent price action in the stock and we can expect the market to be choppy. This is a time to grind it out and you might find one or two trades that you feel comfortable with overnight.

The big money is not chasing stocks at an all-time high. A handful of stocks have accounted for this move up. We will see some end of quarter window dressing. That will exaggerate the volume for the rest of the week. The intraday price action is largely driven by institutional programs.

You are your greatest trading enemy. This is how you should approach the next two months. Can you resist temptation and wait for the set-up?

Support is the low from Friday and SPY $540. Resistance is the all-time high.

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