3/4 Monday Trading Plan

Market Sentiment: Neutral to Bullish

Top News for March 4, 2024

• Stock Market Rally Continues: The S&P 500 continues to make new all-time highs in 2024, with February's performance marking an impressive 5.34% gain. Year-to-date, the index boasts a strong 7.11% total return.

• Optimism Around a Soft Landing: Investor confidence in the Federal Reserve achieving a soft landing for the U.S. economy is growing.

• Positive Earnings Results: Fourth-quarter earnings surpassed expectations, demonstrating corporate resilience to rising costs and high-interest rates.

• Federal Reserve and Interest Rate Updates: The bond market anticipates only a 3.0% chance of a Fed rate cut in March. However, a 66.1% chance exists for a cut of at least 25 basis points by June. The January CPI showed mixed results at 3.1% year-over-year, reflecting ongoing efforts to achieve a soft landing.

• Tech Leaders Shine: Nvidia (NVDA) reported astonishing Q4 revenue growth of 265%, sending its stock prices soaring over 60% YTD.

• Apple Faces EU Fine: The European Union imposed a fine of nearly $2 billion on Apple over preferential treatment of its music streaming service, Apple Music, compared to competitors like Spotify.

• JetBlue and Spirit Merger Blocked: A court ruling has halted the planned merger between JetBlue and Spirit Airlines.

• Winnebago Results Upcoming: Winnebago Industries will release its fiscal 2024 second-quarter financial results on March 21, 2024.

• Market Outlook

  • Tech Sector Leads the Charge: Strong earnings and growth in technology stocks, especially within the AI sector, are fueling the market rally.

  • Historical Trends Offer Insights: Data suggests that a positive S&P 500 performance in January and February usually signals continued growth over the year, with an average return of 14.8%.

Other News Highlights:

• Trump's Ballot Eligibility Restored: The Supreme Court has reinstated former President Donald Trump's eligibility to run in future elections.

• Bitcoin Rally Continues: Bitcoin's bullish momentum continues, with prices exceeding $65,000.

• Nikkei 225 Breaks New Ground: Japan's Nikkei 225 index climbed 0.5%, surpassing the 40,000 mark for the first time.

Trading Plan for Monday

Supports to Watch:

• Immediate Supports: 5134, 5124 (major), 5113 (major), 5106, 5096 (major), 5093, 5085-87, 5079, 5074 (major), 5063, 5052 (major), 5046, 5039-41 (major), 5034, 5028 (major), 5018, 5013, 4998-5000 (major), 4992, 4987-85 (major), 4975, 4970, 4960-65 (major)

Resistances to Monitor:

• Key Resistances: 5144, 5150 (major), 5158, 5163 (major), 5170, 5175, 5183-86 (major), 5190, 5200, 5208-10 (Major), 5216, 5225-30 (major), 5240 (major), 5246 (major), 5259

Trading Strategy:

• Cautious Approach After Parabolic Rally: Exercise caution after the recent parabolic move; price needs to establish new levels for clear trading opportunities. Be prepared for choppy, unpredictable action or a pullback.

• Reduced Position Size: Limit risk exposure on Monday by trading only a partial position (approximately 20% of previous profits).

• Focus on Supports and Demand: Target 5124 and 5113 as primary support zones for potential longs. If 5096 fails, consider the bull flag pattern invalidated and anticipate a deeper pullback. Remain patient until at least the 5052 level before considering new long entries.

Bull Case:

• Trend Continuation: The bull market remains in control. Focus on the 5123-5113 and 5096 support zones. Holding above these levels could lead to a consolidation phase (5113-5150) before pushing higher towards 5163, 5183-86, and ultimately 5225.

• Adding on Strength (Cautiously): Look for opportunities to add to positions in potential pullbacks or flags that develop off the 5134 area.

Bear Case:

• Breakdown Below 5113-5123: A decisive break below these support levels signals a shift in momentum. Consider shorts on failed bounces at 5123/5113, targeting a move down the levels. Use disciplined profit-taking.