12/27 Trading Plan - Tuesday Recap and Wednesday Trading Plan

📊 Market Sentiment: Bullish Santa Clause Rally

The market sentiment remains cautiously optimistic, with the S&P 500 pushing to newer highs today. However, there's an undercurrent of caution with the risk of corrective consolidation. The main focus is on major supports at 4813-16 and 4800 to maintain the rally. A sustained hold above these levels will be crucial for the continuation of the upward trend.

📝 Recap: Historical Santa Rally Period

Yesterday marked a significant rally, reaching a crucial resistance zone at 4830-34. With the holiday week in effect, trading volumes are expected to be lower as institutional and professional traders step away from the market. The current long position from 4799 is being trailed with a stop, indicating a protective strategy against market fluctuations.

🌏 Major Global Catalysts

• Stock Market Momentum: The S&P 500 is approaching record levels, carrying momentum into the shortened trading week after marking an eight-week winning streak. Investors are looking forward to the "Santa Claus Rally," a period of traditionally good days for stocks during the final five trading days of the year and the first two of the new year.

• Mortgage Rate Trends: Mortgage rates have dropped significantly, reaching their lowest level since mid-June. This decrease comes after the Federal Reserve indicated a likelihood of cutting the federal funds rate in the upcoming year. The lower rates are expected to increase homebuying activity in 2024.

• Global Market Movements: US equity futures edged higher, and the dollar remained stable as markets resumed post-Christmas. Asian stocks were mixed in light trading, with gains in emerging Asian currencies against a weakening dollar. Deal news, including the sale of Manchester United, lifted shares of some US-listed companies.

• Economic Forecasts: Analysts predict the global economy will slow further in 2024 despite easing pressures. Factors such as geopolitical tensions, the state of the US and Chinese economies, and the US presidential election will play significant roles in determining economic outcomes.

• Stock Market Review: The S&P 500 is on track to finish 2023 with a gain of about 21%. Despite various challenges, including inflation and rising interest rates, the US economy has shown resilience, and corporate profits are on the rise. Technology stocks have regained their lead, with mega-cap tech stocks contributing significantly to market gains.

• Gold Market: Gold prices have increased, heading for their first annual gain in three years. This rise is attributed to expectations of Federal Reserve rate cuts in 2024 and a weaker US currency.

• Corporate News: Intel plans to invest $25 billion in Israel after securing incentives. Manchester United's ownership saga concludes with a $1.3 billion deal involving Ratcliffe. Emerging Markets reflect on the lessons learned from a misjudged bet on China's post-pandemic recovery. Oil remains in focus amid geopolitical tensions, with the market watching for potential impacts on supply and prices. Nigeria has allowed banks to open accounts for crypto firms, signaling a shift in the regulatory landscape for cryptocurrencies.

📷 Snapshot

Daily

Daily Data Sentiment Analysis:

• EMA 9, 21, 55: Indicating a bullish sentiment with closing prices above these EMAs.

• Overall Sentiment: Bullish.

4-Hour

4-Hour Data Sentiment Analysis:

• EMA 9, 21, 55: Indicating a bullish sentiment with closing prices above these EMAs.

• Overall Sentiment: Bullish

📉 Support Levels

Major Support Levels:

• Major Supports: 4822, 4813-16, 4800, 4795, 4788-86, 4778, 4768, 4751-56, 4741, 4730-34, 4719, 4714, 4709, 4698, 4693, 4680-84, 4673, 4665-68, 4658, 4647, 4641, 4635.

• Note: Particular attention is given to 4800 and 4751-56 for potential scalping opportunities in a level-to-level move.

📈 Resistance Levels

Major Resistance Levels:

• Major Resistances: 4830-34, 4860-63, 4879-82, 4905, 4925, 4948-53, 5005.

• Note: 4854 and 4860-64 are identified as potential reaction zones for those interested in counter-trend trading.

📝 Trading Plan

Bull Case Analysis:

Current Sentiment: The market continues its bullish trajectory, with a focus on defending major support levels to sustain the upward trend.

Key Strategy: Vigilance at key support levels, particularly 4813-16 and 4800, is critical. A defense of these areas could maintain the rally's momentum.

Upside Targets: Key targets include 4830-34 and 4860 if support levels hold. The market's ability to stay above these supports is crucial for continued bullish sentiment.

Risk Consideration: Be mindful of the thin holiday trading volume and potential abrupt market moves. Even as the trend remains positive, sudden shifts are possible and require quick adaptation.

Bear Case Analysis:

Market Vulnerability: A break below key supports at 4813-16 or 4800 could signal a shift to bearish sentiment.

Critical Levels: The 4813-16 zone, followed by 4800, are pivotal. A sustained move below these levels could indicate a failed breakout and a potential sell-off.

Short Entry Points: Should the market show weakness and break below the supports, these levels might serve as entry points for bearish trades, with a focus on managing risks and seeking confirmation.

Downside Targets: Initial bearish targets would be the next major support levels, with each breaking point potentially leading to further downward momentum.

Overall Outlook:

Bullish Trend Continuation: The bullish perspective depends on the market's ability to hold above 4813-16 and 4800. Maintaining these levels could lead to further gains.

Key Levels to Watch: Close monitoring of 4813-16 and 4800 is essential. These levels serve as the barometer for market sentiment on the day.

Resistance Testing: Reaction at resistance levels will provide insight into the market's strength or weakness, influencing the day's trading approach.

Risk Awareness: Preparedness for volatility is key, especially in a holiday trading context with potentially unpredictable moves.

Strategy Adaptability: Flexibility and responsiveness to market changes will be critical in navigating the day's trading successfully.

Today’s Outlook:

Market Dynamics: The market's interaction with the identified support and resistance levels will dictate the short-term trend. The focus is on how these levels hold or break to determine the immediate trading strategy.

Profit Strategy: A level-to-level approach is advised, with a readiness to capitalize on confirmed bullish or bearish movements. The plan includes being prepared for rapid shifts and ensuring trade entries and exits are well thought out and strategic.

Disclosure: This is not financial advice and is for informational purposes only. Please consult a professional financial advisor before making any investment decision.