Daily Commentary: March 04, 2024

Auto Post1Option Commentary

Market Is Bullish – Buy Gaps Down

Posted by Pete Stolcers on March 04

Gaps down are the best day trading set up. We wait for support and enter with confidence knowing that we are joining the longer-term up trend at a good price. Here’s the game plan today.

PRE-OPEN MARKET COMMENTS MONDAY – The market staged a nice rally Friday and it made a new all-time high. Typically, after a big move the previous day, the market rests so that is what I expect today. Overseas markets were flat and the S&P 500 will start on a soft note this morning.

This week will be filled with major economic releases. ISM manufacturing, ADP, JOLTS and the Unemployment Report will be released. I believe that the jobs numbers will be healthy based on the initial jobless claims numbers the last four weeks. A potential boost could come Friday from a drop in the hourly wage component. It came in at a “hot” .6% last month. That is inflationary and I believe the spike was due to states raising minimum wages January 1.

The market rally has been strong. We have a big single day and then we compress. Another big single day and then we compress. There have been hardly any dips and they are brief and shallow. This is consistent with strong buying. I would like to see broad based participation, but the move has largely been tech related. Healthcare and Financials have also been strong.

Earnings season is winding down and we will hear from retailers. Those results will vary from company to company. In general, Q4 will be good, but guidance could be soft.

The FOMC statement is two weeks from Wednesday. I don’t expect any big changes. They will continue to pause until summer. We should expect “higher for longer” and economic conditions have been stable even with higher interest rates. We don’t want to see weak economic reports and I am not expecting them.

I am favoring premium selling strategies like OTM bullish put spreads for swing traders.

Day traders should wait for support and buy. Down opens are our best scenario. Be patient today and expect a dull trading session. When the iron is hot like it was Friday – strike. Bullish trend days don’t happen often. We have to wait for those. When we don’t have them, we need to trim our size and trade count. We also have to temper our profit expectations because moves will hit resistance.  

Support is at SPY $508.50 and resistance is at the high from Friday.

Live Trading

Open an Account

Paper Trading