Trading Plan for Friday, May 3rd, 2024

Trading Plan for Friday, May 3rd, 2024

Market Sentiment: Uncertain, with bulls maintaining a tentative lead ahead of multiple high-impact market events (Apple Earnings and Jobs Report). Expect extreme volatility and plan accordingly.

Key Supports

• Immediate Supports: 5068 (major), 5054 (major trendline - note this level rises daily)

• Major Supports: 5028 (major), 5001 (major)

Key Resistances

• Near-term Resistance: 5081 (major), 5102 (major), 5116 (major), 5136 (major)

• Major Resistances: 5155-58 (major), 5191 (major), 5208 (major)

Trading Strategy

• Earnings and Jobs Volatility: Be prepared for unpredictable, potentially violent price swings triggered by the Apple earnings release (4:30 PM EST) and the jobs report (8:30 AM EST). Prioritize reacting to price action over anticipating.

• Capital Preservation: Adopt a cautious approach and consider reducing position sizes or even sitting out the immediate volatility. Focus on protecting your gains from today's squeeze.

• Long Opportunities: Due to the heightened risk, avoid direct bids at support. Prioritize failed breakdowns with flushes and reclaims for safer long entries. In the event of a deep flush, consider knife-catches at major supports (5028, 5001).

• Short Opportunities: Look for back-tests of 5116 and 5136 for shorts, but only if markets exhibit a strong negative reaction to earnings or positive jobs data. Proceed with extreme caution.

• Focus on Levels: Use the provided support and resistance levels to guide your decisions, regardless of the volatility. Pay close attention to failed breakdowns and setups, as they will be the most reliable in this environment.

Bull Case

• Holding Support: Defending the 5054-50 support zone remains crucial.

• Reclaiming Resistances: Bulls need to push above the 5081 resistance zone after any potential sell-off on events, working back towards 5116, then 5136 for further confirmation and a potential sustained breakout.

Bear Case

• Breakdown Signals: A convincing break below 5054-50 initiates the downside move. Watch for bounces/failed breakdowns for potential short entries. Be mindful of whipsaws and traps around major events.

News: Top Stories for May 3rd, 2024

Impact of Monetary Policies:

• U.S. Monetary Policy and Global Markets: Contractionary policy affects global financial conditions through various channels.

• Responses to U.S. Policy Shifts: Tightening policy induces global deleveraging and affects asset prices and credit flows.

• Emerging Markets' Sensitivity: EMs experience volatility and capital outflows due to U.S. policy changes.

• Transmission Mechanisms: Policy changes influence dollar-denominated assets, global credit conditions, and bank behavior.

Long-Term Implications:

• Global Trade Outlook: Modest rebound in 2024 challenged by interest rates, demand fluctuations, and geopolitical tensions.

• Manufacturing Sector Performance: Continued uncertainty with challenges like labor shortages and supply chain disruptions.

• Advances in Digital Manufacturing: Adoption of digital twins and smart tech enhances operational efficiencies.

• Geopolitical Impact on Trade: Persistent tensions disrupt global trade, highlighting vulnerability of supply chains to political instability.