Trading Plan for Tuesday, May 7th, 2024
Trading Plan for Tuesday, May 7th, 2024
Market Sentiment: Bullish, but increasingly cautious following a strong breakout. The RSI is deeply overbought, increasing the risk of sudden pullbacks. Proceed with heightened awareness of volatility.
Key Supports
Immediate Supports: 5186-88 (major), 5163 (major)
Major Supports: 5144-46 (major), 5060-65 (major)
Key Resistances
Near-term Resistance: 5214-5218 (major), 5246-50 (major)
Major Resistances: 5272 (major), 5302-04 (major)
Trading Strategy
Post-Breakout Cautiousness: The market is in overbought territory following today's strong surge. Prioritize capital preservation and maintain disciplined risk management. Avoid chasing longs or aggressively shorting against strength.
Long Opportunities: Due to the overbought conditions, focus on failed breakdowns at 5186-88 or ideally 5144-46 for long entries. In the event of a deeper dip, consider knife-catches at 5163 for quick scalps.
Short Opportunities: Look for back-tests of 5214-5218, 5246-50, or potentially 5272 for short entries, targeting level-to-level profits. Proceed with extreme caution and be ready to cut losses quickly.
Focus on Levels and Patience: Trade the provided support and resistance levels rigorously. Let price action develop, be patient, and avoid emotional trading.
Bull Case
Holding Support: Defending the 5144-46 breakout zone remains crucial for bulls. Holding above this level would indicate a healthy dip and a potential continuation higher.
Consolidation and Bounce: A period of consolidation and a rebound off 5186-88 or 5144-46 would set the stage for further advances, potentially targeting 5214-18, then 5246-50.
Bear Case
Breakdown Signals: A convincing break below 5186-88 would signal a potential pullback and could lead to a retest of the 5144-46 breakout zone. A breach of 5144-46 would be a more significant bearish development. Monitor bounces/failed breakdowns at these levels for potential short entries.
News: Top Stories for May 7th, 2024
Federal Reserve's Influence:
Interest Rate Decision: Fed keeps rates steady at 5.25% to 5.5% for the sixth consecutive meeting, reflecting concerns about inflation and labor market conditions.
April 2024 Jobs Report: Economy adds 175,000 jobs in April, below expectations, potentially alleviating inflation pressures.
Commercial Real Estate Midyear Outlook: Despite high-interest rates, commercial real estate sectors show resilience, suggesting less sensitivity to monetary policy.
Global Economic Growth Forecasts: World Bank and OECD predict below-average global GDP growth for 2024, influencing market sentiments and central bank policies.
Impact on Market Dynamics:
Bond and Equity Markets: Higher rates increase Treasury yields, shifting investor preference towards bonds and contributing to equity market volatility.
Housing Market Effects: Housing prices respond swiftly to policy adjustments, driven by changes in mortgage rates, impacting affordability and market health.
Influence on International Trade: Stronger dollar affects trade balance by making exports costlier and imports cheaper, potentially moderating domestic inflation.
Future Outlook:
Market sentiment remains cautious, with analysts not expecting rate cuts until at least 2025 if inflation persists, influencing investment and consumer behaviors.
Market Sentiment: Bullish, but increasingly cautious following a strong breakout. The RSI is deeply overbought, increasing the risk of sudden pullbacks. Proceed with heightened awareness of volatility.
Key Supports
Immediate Supports: 5186-88 (major), 5163 (major)
Major Supports: 5144-46 (major), 5060-65 (major)
Key Resistances
Near-term Resistance: 5214-5218 (major), 5246-50 (major)
Major Resistances: 5272 (major), 5302-04 (major)
Trading Strategy
Post-Breakout Cautiousness: The market is in overbought territory following today's strong surge. Prioritize capital preservation and maintain disciplined risk management. Avoid chasing longs or aggressively shorting against strength.
Long Opportunities: Due to the overbought conditions, focus on failed breakdowns at 5186-88 or ideally 5144-46 for long entries. In the event of a deeper dip, consider knife-catches at 5163 for quick scalps.
Short Opportunities: Look for back-tests of 5214-5218, 5246-50, or potentially 5272 for short entries, targeting level-to-level profits. Proceed with extreme caution and be ready to cut losses quickly.
Focus on Levels and Patience: Trade the provided support and resistance levels rigorously. Let price action develop, be patient, and avoid emotional trading.
Bull Case
Holding Support: Defending the 5144-46 breakout zone remains crucial for bulls. Holding above this level would indicate a healthy dip and a potential continuation higher.
Consolidation and Bounce: A period of consolidation and a rebound off 5186-88 or 5144-46 would set the stage for further advances, potentially targeting 5214-18, then 5246-50.
Bear Case
Breakdown Signals: A convincing break below 5186-88 would signal a potential pullback and could lead to a retest of the 5144-46 breakout zone. A breach of 5144-46 would be a more significant bearish development. Monitor bounces/failed breakdowns at these levels for potential short entries.
News: Top Stories for May 7th, 2024
Federal Reserve's Influence:
Interest Rate Decision: Fed keeps rates steady at 5.25% to 5.5% for the sixth consecutive meeting, reflecting concerns about inflation and labor market conditions.
April 2024 Jobs Report: Economy adds 175,000 jobs in April, below expectations, potentially alleviating inflation pressures.
Commercial Real Estate Midyear Outlook: Despite high-interest rates, commercial real estate sectors show resilience, suggesting less sensitivity to monetary policy.
Global Economic Growth Forecasts: World Bank and OECD predict below-average global GDP growth for 2024, influencing market sentiments and central bank policies.
Impact on Market Dynamics:
Bond and Equity Markets: Higher rates increase Treasury yields, shifting investor preference towards bonds and contributing to equity market volatility.
Housing Market Effects: Housing prices respond swiftly to policy adjustments, driven by changes in mortgage rates, impacting affordability and market health.
Influence on International Trade: Stronger dollar affects trade balance by making exports costlier and imports cheaper, potentially moderating domestic inflation.
Future Outlook:
Market sentiment remains cautious, with analysts not expecting rate cuts until at least 2025 if inflation persists, influencing investment and consumer behaviors.
