3/5 Tuesday Trading Plan

Market Sentiment: Neutral

Weekly High Volatility Risk: High

Trading Plan for Tuesday

Supports to Watch:

• Immediate Supports: 5135 (major), 5125-27 (major), 5110-13, 5102 (major), 5092 (major), 5087, 5079, 5070-73 (major), 5065, 5053, 5045 (major), 5037 (major), 5033, 5026 (major), 5018, 5013 (major), 5003, 4998 (major), 4987, 4983 (major), 4976 (Major), 4971, 4960-64 (major).

Resistances to Monitor:

• Key Resistances: 5140, 5146, 5151 (major), 5163 (major), 5170 (major), 5179, 5187-92 (major), 5200, 5209, 5219, 5226 (major), 5236, 5241 (major), 5248, 5268-62 (major), 5286, 5297-5301 (major), 5305, 5312, 5320, 5327 (major).

Trading Strategy:

• Cautious Approach with Chop: After last week's strong directional move, expect increased volatility and less predictable price action. Focus on nimble trading, targeting profits, and moving to the sidelines frequently.

• Potential Longs: Consider buying dips at 5135 (tested heavily, may be less reliable) and 5125-5127. Aim for shorter-term gains. Only target major support levels for longer-term holds if 5092 fails.

• Deep Correction Watch: Be highly cautious of long positions if 5092 falters. A sustained break below this level would signal a substantial correction with multiple major support failures, a scenario well-suited for short positions.

• Shorting: I avoid countertrend shorts in ES. Focus on shorting potential breakdowns at 5163, 5170, and 5187-92 for those comfortable with this style.

Bull Case:

• Trend Continuation: Bulls remain in control of the broader trend. Short-term corrections are expected, but a sustained bearish shift would require weeks of downward pressure.

• Base Building: A successful defense of the 5125-27 zone, with 5092 as the absolute floor, could pave the way for a consolidation pattern under 5150. This would set the stage for a breakout towards 5170, 5187-92, and eventually 5226.

• Adding on Strength: Buying dips after reclaiming 5140 shows potential for short-term gains.

Bear Case:

• Significant Correction: A break below 5092 indicates a failure of last week's breakout and the start of a deeper, multi-day correction - ideal for shorting opportunities.

• Breakdown Trades: Breakdown trades target shorts below failed support levels. Look for strong bounces and failed breakdowns. 5125-27 also presents a potential shorting point if it fails to hold.

In Summary: The trend remains bullish, but volatility is increasing. Prioritize nimble trading and focus on support/resistance levels. If 5125-27 holds, a new base may form under 5150. A break below 5092 signals a major correction and triggers short positions.

News: Top Stories for March 5, 2024

• Stock Market Performance: The S&P 500 saw a strong February performance with a 5.34% gain and a current YTD total return of 7.11%. However, investor sentiment is shifting, with concerns about the Fed potentially postponing interest rate cuts. Wall Street closed lower on March 4th ahead of key economic data releases and Fed Chair Jerome Powell's testimony.

• AI Stocks Drive Gains: The technology sector, particularly AI-focused stocks like Nvidia, have experienced strong earnings growth. Nvidia's Q4 revenue surge of 265% highlights this trend.

• Fed Policy & Economic Data:

  • Fed Chair Jerome Powell will testify before Congress on March 6th and 7th, with markets awaiting updates on monetary policy and interest rate trajectories. The Fed has denied plans for rate cuts at the March FOMC meeting.

  • The latest Federal Reserve projections anticipate a marked slowdown in US GDP growth for 2024. Despite this, the S&P 500 has reached new all-time highs fueled by strong economic fundamentals.

• Global Growth Outlook:

  • China sets a 5% economic growth target for 2024, in line with expectations and marking a rebound from the previous year's pace.

  • IMF paints a resilient global economy forecast for 2024 and 2025, projecting growth at 3.1% and 3.2%, respectively. This is attributed to robust performance in the US and various large emerging markets, alongside fiscal stimulus in China.

• Corporate Highlights:

  • Target exceeded Wall Street estimates with a strong fourth-quarter profit increase of 58%, showcasing effective cost and inventory management. The retailer's shares surged 8.5% premarket.

  • Other major retailers, including Costco, Gap, and Nordstrom, will release their holiday sales figures, offering insight into consumer sentiment and the economy's health.

• Crypto Trends & Investment Flows:

  • Bitcoin funds experience record inflows, signaling growing investor interest. BlackRock's bitcoin ETF achieved the fastest-ever rise to $10 billion in assets.

  • Investors favor AI and technology stocks, with Nvidia noted as a top performer in the S&P 500.

• Regulatory & Policy Developments:

  • President Biden forms a strike force to tackle 'corporate rip-offs', suggesting heightened regulatory focus on corporate actions.

  • EU regulators continue to tighten their grip on Big Tech this year, as evident in a recent record antitrust fine levied against Apple.