Daily Commentary: January 31, 2023

Darwin Saraza1Option Commentary

The Calm Before the Market Storm

Posted by Peter Stolcers on January 31

Fasten Your Seat Belts!

PRE-OPEN MARKET COMMENTS TUESDAY – This is going to be a very important week. Earnings and interest rates drive the market and it is coiling like a spring inside of a D1 wedge. We are going to breakout one way or the other this week.

Now that I’ve set the scene, I have to tell you that I am going to miss all of the action. I will be out Wednesday through Friday.

This is a critical juncture for the market. Buyers and sellers have been active. The same forces from 10 months ago are still in play. This week institutions will digest the news and they will take a stance. When the dust settles, we will use technical analysis to see who has the ball. A breakout through the wedge needs to have follow-through. The breakout alone is not enough.

Tomorrow will be busy. ADP will report private job growth in January before the open and ISM manufacturing will be released after the open. In the afternoon the FOMC statement will be released. After the close Wednesday, META will post results.  Thursday after the close AMZN, AAPL and GOOG will report. The next morning the Jobs Report will be released. We will be drinking water from a fire hydrant the next few days and these events will set the tone for the next month at minimum.

Swing traders need to wait patiently for a few more days. We will have our answer shortly. I believe the breakout or breakdown this week will set the tone for the next few months and we will take longer term swing trades based on that outcome.

Day traders use caution the next two days. This is the calm before the storm and we should expect light volume chop and some position squaring.

Support is at the major MAs. They important intraday, but they are pretty meaningless on a swing basis. The wedge is what matters and that should serve as your guide for swings. Resistance is at the high from Friday.    

Live Trading

Open an Account

Paper Trading