Daily Commentary: January 11, 2024

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The Market Is A Pressure Cooker

Posted by Pete Stolcers on January 11

Support is forming and we are within striking distance of the all-time high. We are likely to get a big move through it very soon.

PRE-OPEN MARKET COMMENTS THURSDAY – I am bullish and this dip will soon run its course. The market feels like a pressure cooker that is ready to blow. The dip this year has been shallow and I am seeing signs of support this week.

As I have mentioned, the CPI was a likely speedbump. It came in at .3% and .2% was expected. The S&P 500 sold off on the news, but the damage is contained and it is still trading well above the open from yesterday. The market was pricing in great news so surprise favored a negative reaction. From my perspective, this is a “bullet dodged” for swing longs. I expected to take a little heat this morning and so far it does not look like buyers are concerned by the reading.

Because of my bullish market opinion and my confidence, there was no reason to adjust risk heading into the CPI. In fact, I have been suggesting you add to swing longs give the support we are seeing. The could be in the form of bullish put spreads or long ITM calls for stocks that have a low option IVs. I feel the market is numb to inflation and that it is more focused on earnings season.

Big banks will report earnings tomorrow. Citigroup is going to take a pretty big write down on currency losses in Argentina. That seems like an isolated instance for the sector. Earnings will be good, but the stocks have run hard so I am not expecting a big move either way on these stocks. The backdrop for banks is sound so they will hold the gains.

As the market continues to form support, the bid will strengthen. Mega cap tech stocks will report in two weeks. Shorts will not be aggressive until they report, especially not when the market is within striking distance of the all-time high.  

Down opens in an upward trending market are the pattern we like the most. Wait for support and buy. I am seeing nice sustained upward price action on the long side. Good shorts are very hard to find. Don’t fight what you see.

Support is at the 20-day MA and AVWAPQ. Resistance is at $480. We are one good day from the all-time high.

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