2/15 Friday Trading Plan

Feb 16

📊 Market Sentiment: Neutral to Bearish

OPEX Day = High Volatility

Things could go either way today, so exercise extreme caution. I do not trade on OPEX days. The last hour of the trading session will be a determining factor on where we're headed next week.

Stock Market Outlook:

• Earnings Growth Expectations: Wall Street's anticipation of double-digit earnings growth for the S&P 500 in 2024 and 2025, coupled with the risk of a significant correction if these expectations are not met, underscores the market's current optimism and potential volatility.
  
• Federal Reserve's Rate Cut Speculation: The bullish momentum of the S&P 500 is partly driven by expectations of a Federal Reserve pivot, yet concerns arise that the market may be overly optimistic about the timing and justification of rate cuts.
  

U.S. Consumer Spending:

• Sustained Strong Spending: Despite the surge in household debt, strong consumer spending supported by job gains and lower inflation fuels speculation about a potential "soft landing" in 2024.
  

Federal Reserve and Inflation:

• Progress on Inflation: The Federal Reserve's actions have led to a reduction in inflation levels, though still above the target, raising speculation about possible rate cuts in response to economic conditions.
  

Recession Risks:

• High Recession Probability: Rosenberg's prediction of an 85% chance of a recession in 2024 based on comprehensive economic indicators highlights the underlying risks in the current economic environment.
  

Global Economic Outlook:

• Challenges to Global Growth: Tight monetary policy and geopolitical uncertainty continue to pose risks to global economic growth, with specific challenges facing economies like Japan and expectations of subdued global growth in 2024.
  

Asian Markets:

• Wall Street's Rally Influence: Asian shares, particularly Japan's Nikkei, reflecting Wall Street's rally despite Japan's economic contraction, emphasize the interconnectedness of global markets.
  

Corporate News:

• Semiconductor Sector Optimism: Applied Materials Inc.'s bullish revenue forecast highlights the sector's growth potential amid increased investments in semiconductor production.
  

Energy and Commodities:

• Oil Price Fluctuations: The slight declines in U.S. benchmark crude and Brent crude prices reflect the ongoing volatility in the energy market.
  

Currency Markets:

• Dollar's Movement: The U.S. dollar's performance against major currencies underscores the currency market's sensitivity to economic data and policy decisions.
  

📈 Trading Plan for Friday:

Support Levels to Watch:

• Key Supports: 5010 and 4998-5000, serving as crucial points for gauging market stability or signaling potential shifts.
  

Resistance Levels to Watch:

• Critical Resistances: 5046-48 and 5063-65, acting as barriers to upward market movements and indicators of potential shifts in sentiment.
  

Trading Strategy:

• OPEX Friday Caution: The emphasis on capital preservation and cautious trading in light of OPEX Friday and the recent market rally.
  
• Bull Case: Monitoring the market's ability to maintain above key support levels for a continued rally, with an eye on reclaiming resistance levels for sustained momentum.
  
• Bear Case: Preparation for a downward trend should key support levels, particularly 4998-5000, fail to hold, signaling deeper market corrections.
  

Tactics:

• Focus on disciplined trading within identified support and resistance levels, prepared to adapt quickly to market volatility and OPEX day dynamics.
  

🛑 Disclaimer:
This analysis is for educational purposes only and is not financial advice. Consult a professional financial advisor before making any trading decisions.