DailyPlay Updates -March 9, 2023

Investment Rationale

Stocks see-sawed most of yesterday’s session, but in the end, the SPX closed up 6 points. Fed Chair Powell is done with his testimony, and today may be a quiet one as most investors will wait for tomorrow’s unemployment report before potentially making new commitments to the market. Powell made it clear that the jobs report and next week’s CPI figure will influence their rate decision next Wednesday.

I have now just spent over 45 minutes looking for a new DP for today, and almost every name I looked at is above near-term support and beneath near-term resistance, just as the SPX is. With a big number coming out tomorrow, I will reiterate what I said in Monday’s webinar: Don’t push to trade this week. (In fact, I did a video on the subject “Sometimes the Best Trade is Not to Trade” for my InTheKnowTrader.com site on Tuesday. It’s available for anyone to watch for free on YouTube.  Here’s the link: https://youtu.be/F4tcBUzFX_Y.)

If you’ve been watching the market movement this week, other than the decline after Powell’s comments on Tuesday, it’s been very choppy and directionless. Tomorrow will be the next catalyst for a potential decent directional move, and much of it will likely be done before the NYSE even opens. Again, unless you think that you personally have a major edge over some of the smartest people and computers on the Street, trying to guess which way the market will move tomorrow, today, is not a game I want to play while we’re in between important support and resistance levels.  I hope you’re not disappointed that I’m not putting out a new idea today, but I can tell you that I have absolutely no plans to trade today knowing how important tomorrow’s number will be. I look at it as preservation of my capital, but I’m also waiting for the market to get out of its trading range and make a more definitive directional move that we then have a greater chance of further exploiting.

Any market pundit who tells you with high confidence which way the market is going is simply hoping they are correct (and is silently very much worrying that they are not). But the reality is that right now, no one can really know if the strength of the economy will be offset by the bond market’s indication of a recession. So, take the bullish bias of the Tom Lee’s of the world and the bearish stance of the Mike Wilson’s of the world, and put them on the backseat. Neither has been right at all this year, nor even been willing to adapt to what the market is actually saying.  Right now, I’m neutral the market, and staying with that call until I have evidence that the next real move is at hand.