3/6 Wednesday Trading Plan

Market Sentiment: Neutral

Weekly Volatility Risk: High

News: Top Stories for March 6, 2024

• Mortgage Rates Ease: Borrowers are experiencing some relief with declining mortgage rates in a generally expensive housing market.

• BOJ Outlook: Bank of Japan officials are expressing increased confidence in wage growth, potentially signaling an end to Japan's negative interest rate policy soon.

• Stock Market Performance: The S&P 500 continues to show strength, gaining 5.34% in February with a YTD total return of 7.11%. Investor optimism persists around the Federal Reserve's potential for a soft landing in the U.S. economy.

• Tech Sector Strength: AI stocks, particularly Nvidia, are driving impressive earnings growth in the technology sector.

• Chinese Economic Picture: China shows robust economic activity in early 2024, prioritizing technology advancement and industrial upgrades. However, declines are seen in Hong Kong's Hang Seng index and the Shanghai Composite index against global market highs.

• Fed Policy & Interest Rates

  • The Federal Reserve is anticipated to hold interest rates steady at their next meeting on March 20.

  • The market is factoring in a chance of a rate cut by June, while mixed economic data guides the Fed's approach to a soft landing.

• 2024 Elections & Market Uncertainty: The upcoming U.S. presidential election could inject volatility into the stock market, raising concerns about tech sector valuations.

• Corporate Highlights:

  • CrowdStrike has reported strong earnings performance.

  • Skincare companies consider going public with IPOs in 2024.

• International News:

  • China's exports and bank loans increase, pointing to potential economic expansion.

  • Gaza cease-fire talks reach a critical juncture with geopolitical implications.

• U.S. Political Updates:

  • Reports suggest Nikki Haley is ending her presidential campaign.

  • The Biden administration's decision to cut credit card late fees affects bank revenues.

• Cryptocurrency Trend: Bitcoin has reached a fresh record high, sparking heightened investor interest.

Trading Plan for Wednesday

Supports to Watch:

• Immediate Supports: 5081, 5073, 5063-66 (major), 5057, 5052, 5044, 5035-40 (major), 5028, 5022, 5018 (major), 5013, 5009, 5003, 4996-98 (major), 4987, 4983 (major), 4976, 4970 (major), 4962-66 (major).

Resistances to Monitor:

• Key Resistances: 5088 (major), 5096 (major), 5105, 5117-19 (major), 5126-28 (major), 5135, 5140, 5146, 5153-5155 (major), 5167, 5177 (major), 5183, 5197 (major), 5207, 5212, 5219, 5228-30 (major), 5241, 5247, 5252-54 (major), 5268, 5278 (major).

Trading Strategy:

• Navigating Increased Volatility: Expect complex trading conditions as uncertainty around trend continuation and higher volatility persists. Employ disciplined level-to-level trading strategies.

• Focus on Support at 5088-81: This zone is critical; trade tests of 5081 or reclaims of 5088 for potential longs.

• Support at 5063-65: This major support zone may still have strength left for long attempts. Ideally, look for a test of this afternoon's low (around 5062), followed by a reclaim, for a long entry setup.

• Backtesting Breakout Level: Monitor the 5035-40 support level; it represents a crucial backtest of February 22nd's triangle breakout. This is a high-confidence area for longs.

• Potential Shorting Opportunity: The 5117-19 and 5126-28 zone offers a potential short setup for quick points if today's breakdown can be retested. Exercise caution; a strong reaction and reclaim could signal a powerful short squeeze.

Bull Case:

• Immediate Focus: Defense of 5088-81 as a base with reclaims of 5096 setting the stage for a push towards 5105, followed by 5117-19.

• Opportunities on Strength: Consider adding long positions during overnight flagging and within the base.

Bear Case:

• Breakdown Below 5081: A breakdown below this support targets potential short entries around 5079-80. Use breakdown trades cautiously, recognizing their low win rate but high reward potential.

• Additional Short Opportunities: Look for shorts at 5063-65 (if it fails) and potentially at 5060.

In Summary: The trend could hinge on Wednesday's price action. Be prepared for complex trading conditions. Defending 5088-81 would favor bulls targeting a retest of today's high. Loss of 5081 indicates a potential move down towards 5065, with further downside risk if this level fails.