Daily Commentary: March 27, 2024

Auto Post1Option Commentary

Don’t Be “Chicken Little”

Posted by Pete Stolcers on March 27

We want a market pullback and now that we are getting one traders are “scared”.

PRE-OPEN MARKET COMMENTS WEDNESDAY – There’s not much to drive the market during this holiday-shortened week. The third look at GDP is not going to move the needle. We want a market pullback!

Since the FOMC spike last week, the market has been slowly retracing and yesterday it closed right where it was before the Fed statement. Good! That’s right where it should be. That announcement was a great big “nothing burger”. Rates are going to stay “higher for longer” just as they have been saying. Why should the market rally on that news?

The fact that the market didn’t drop on that “hawkish Fed statement” is bullish. If there was a reason to sell, that was it. Instead, buyers who have been waiting for a dip got nervous. They jumped the gun thinking that we might not get a dip and that the next leg higher is starting.

In my Sunday video I told you to be patient. I told you this is going to be a very dull week, so keep it light. I also said that towards the end of the week, we should start to see the bid strengthen. If you are day trading, you have to buy dips. Do not chase breakouts. We have not seen any signs that the market wants to move higher and instead we’ve gotten a slow drift lower. This is not unexpected. Remember… I said towards the end of the week.

The market rally is maturing and the easy gains have been made. Now we are going to see a more normal stair-step pattern. The market surges higher and then it leaks lower and it tests the bid. Once the programs confirm that buyers are still interested, we start to grind higher. Right now, we are testing the bid and we need to let that process play out.

If you are dying by a thousand cuts, why have you been trading the last few days? You are pissing away your hard earned money and you will need that leg higher just to offset your losses. Here’s what happens. You get frustrated and you are losing money on your longs. Then you start thinking, “Hey, this market looks really weak. I think it’s ready to roll over. Maybe it’s time to try some shorts, they seem to be performing well.” So you start taking a few day trading shorts and then BLAM! a market rally out of no where. Instead of focusing on the longs that you should be buying on this dip, you are scrambling to cover your shorts and to minimize the damage. The next leg of the rally unfolds and you took a beating. What’s even worse is you missed the train.


When we finally get the dip we are waiting for, you are going to get scared. “Maybe Pete is wrong this time. Maybe he missed something.” Pete didn’t miss anything. Look at the #$%$ chart since November. Does it look weak to you?

The problem is you. You can’t stop yourself from trading. You have no patience. You are trading from the long side when you shouldn’t be and then you convince yourself to trade from the short side. Then we get the rally we’ve been waiting for and you lose even more money. The stocks you were trying to buy earlier in the week scream higher and you think…”gee if I had only held on to those a few more days I would have made a lot of money”.

Bull markets like this do not roll over and “play dead”. There has to be a buying climax and a sharp reversal. That is typically profit taking because valuations are getting stretched. The other reason for a major drop is a macro change. We don’t have any news this week. We heard from the Fed last week so that is out of the way. Economic releases have been strong and the bottom is NOT going to fall out. Earnings season will start in two weeks and that typically attracts buyers.

I see this happen all the time and I saw it in January. I gave you my Q1 forecast in December and the first four days of the year I heard rumblings. “This looks weak, maybe Pete is wrong.”

Stop shorting and do not buy until we have signs of support! That could happen today or in a couple of days. Be patient and stop pissing your money away in a low probability trading environment. Set alerts to buy dips. Don’t be afraid when we get one, be glad. The deeper it is, the better our entry.

We will get one more push higher in April and then we will watch for signs of strain or confirmation of strength. I don’t need to know what is going to happen in June, I just have to know what is going to happen in April. That is the beauty of short-term trading.

Wait for support and buy the dip… wait for support and buy the dip… wait for support and buy the dip.

Live Trading

Open an Account

Paper Trading