12/29 Trading Plan - Thursday Recap and Friday Trading Plan📊 Market Sentiment: Bullish
The market sentiment remains bullish, with a strong upward trend persisting into the final day of 2023. Traders are maintaining a positive outlook, focusing on the support levels of 4829-31 and 4808-04 and resistance levels of 4834 and 4838. The general mood of traders is of cautious optimism, with many hoping to cap off the year with another breakout leg.
📝 Recap: Steady Above Support
Yesterday's market activity saw a continuation of the bullish trend, with every long position working for weeks. The market experienced a failed breakdown of the 4828 level just before the close, providing an opportunity for traders to add a little long exposure. The 4829-31 support level was tested multiple times, reinforcing its significance.
🌜 The Markets Overnight
Overnight, the market remained within the 4829-4838 zone, which is currently seen as pure chop and virtually untradable. Traders are waiting for proper range expansion before making any significant moves. The 4829-31 support level remains critical, and any dips below this level are quickly bought up.
🌏 Major Global Catalysts
Global Economic Forecasts:
Schroders released global growth forecasts for 2024 and 2025, examining the links between economies and stock markets.
The World Trade Organization (WTO) slashed its growth forecast for global goods trade by more than 50%.
The Organisation for Economic Co-operation and Development (OECD) forecasts global GDP to rise by 2.7% in 2024, down from 2.9% in 2023.
Deloitte Insights suggests that equity prices are anticipatory and reflect a view that interest rates will come down soon, indicating a potential recovery in 2024.
Interest Rates and Inflation:
Central banks have increased interest rates across 2022 and 2023 to tackle inflation, with the Federal Reserve's benchmark interest rate reaching 5.25-5.5%.
Market bets place a high probability on the Federal Reserve beginning rate cuts as soon as March 2024.
U.S. annual headline inflation slowed to 3.1% in November from 6.4% in January.
Market Surprises and Performance:
The Economist highlighted the five biggest market surprises of 2023, noting that forecasters had a difficult time as economic assumptions were overturned.
The S&P 500 is close to a new record, with all three major stock indexes on pace for their ninth consecutive week of gains.
Regional Economic News:
The UK economy is stagnating as interest rate rises start to bite, and the IMF warns that UK interest rates will need to stay high into 2024.
The Chinese economy's performance is a key variable for the global economy in 2024.
Ecuador pledges austerity to win IMF support for its economic plan.
Housing and Labor Markets:
U.S. mortgage rates have been easing since late October, with the average long-term rate retreating for the ninth straight week.
The labor market has been strong throughout 2023, driving economic growth.
Stock Markets:
World stocks are mixed in muted holiday trading as the year draws to a close.
European shares opened higher, with gains in France and Germany, while Asian markets showed a mixed performance.
Financial Sector and Jobs:
The financial services industry faces risks from cyberattacks and new financial products creating debt.
The impact of AI on jobs and the tightening of labor markets in many economies have been significant topics throughout the year.
Oil Prices:
Global inflation fears persist as oil prices rise towards $100 a barrel.
Climate and Economy:
Daily updates on climate change and the global economy indicate a growing concern about the intersection of environmental issues and economic performance.
Other Economic Indicators
Money market interest rates are fluctuating, with some rates reaching up to 5.13%.
📷 Snapshot
Daily
Daily Data Sentiment Analysis:
EMA 9, 21, 55: Indicating a bullish sentiment with closing prices above these EMAs.
Overall Sentiment: Bullish.
4-Hour
4-Hour Data Sentiment Analysis:
EMA 9, 21, 55: Indicating a bullish sentiment with closing prices above these EMAs.
Overall Sentiment: Bullish
📉 Support Levels
Major Support Levels:
Major Supports: The major support levels for the upcoming trading day are 4829-31, 4823, 4815, 4808-04, 4788, 4782, 4776-78, 4764-67, 4756, 4743, 4733-36, 4720, 4708, 4698, 4692, 4684, 4675-78, 4665, 4658-60.
Traders should pay particular attention to the 4829-31 and 4808-04 levels, as these have been tested multiple times and remain critical for the bullish trend.
📈 Resistance Levels
Major Resistance Levels:
Major Resistances: The major resistance levels for the upcoming trading day are 4834, 4838, 4843, 4847, 4854, 4861, 4870, 4877-81, 4893, 4903-06, 4911-14, 4925-27, 4933, 4945-50, 4958, 4963, 4976, 4983, 4990, 5005-08.
The 4834 and 4838 levels are of particular interest, as these could potentially trigger a breakout leg.
📝 Trading Plan
Bull Case Analysis: The bullish sentiment persists, and the key strategy remains to hold long positions and add on failed breakdowns. Upside targets include 4843, 4854, and 4861, with risk considerations focused on the 4829-31 and 4808-04 support levels.
Bear Case Analysis: The market vulnerability begins when a support level fails. Critical levels include 4808-04, with short entry points considered after a good bounce/failed breakdown. Downside targets are level-to-level profit takes.
Overall Outlook: The overall market outlook remains bullish, with key levels and resistance testing being of utmost importance. Traders should remain aware of the risks and be ready to adapt their strategies as necessary.
Today’s Outlook: The market dynamics for the upcoming trading day are expected to continue the bullish trend, with specific profit strategies focused on long positions and shifts in sentiment or strategy based on support and resistance levels.
Disclosure: This is not financial advice and is for informational purposes only. Please consult a professional financial advisor before making any investment decision.
