Daily Commentary: September 14, 2023

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Market Testing the High of the Week

Posted by Peter Stolcers on September 14

We’ve had major news the last two days. Here’s what to watch for.

PRE-OPEN MARKET COMMENTS THURSDAY – Until the SPY can close above $452.50 or below $442.50 we can expect choppy back and forth price action. The market needs a driver.

The ECB raised by 25 basis points and hinted that they might be done with rate hikes. This is not a big surprise. They were 50:50 on whether to hike or not at this meeting.

Next week the Fed will announce its rate decision. There is a 93% chance they will pause. The odds of pausing in November and December are almost 50%. Let’s say that the Fed hikes 25 basis points before year end. Will that really make a big difference? I don’t believe so. The Fed is close to the end of its tightening cycle and so is the ECB. They sense that economic growth is starting to slip so they are cautious at this juncture. Hotter inflation will delay any future rate cuts even if growth starts to falter.

This morning the PPI came in hotter than expected and yesterday the CPI core rate came in hotter than expected.

Moody’s downgraded the debt of China’s property developers and the PBOC cut rates by 25 basis points.

So how do you trade this shit? You keep it small and focus on the very best stocks that are breaking through technical levels on heavy volume with tight orderly price action. Keep your trade count down and focus on a few stocks (don’t spread yourself thin). Look for reversals at support and resistance.

1OP is in a bullish cycle and we are going to test the high of the week right away. If we can get through on the first shot and the volume is heavy, we have a chance for a breakout and a bullish trend day ahead of triple witching. I am not expecting a breakout or a rejection. I am just going to watch to see what plays out and then I will trade the outcome.

Support is at the 50-day MA and resistance is at the high of the week ($448.77).

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