2024 Market Preview

I logged over 20,000 unusual options trades in my database this year, this look into 2024 is alot of my thoughts and feelings of what comes next based off the options action I have available to me. Overall, my hope is that this can be a guide to quality names across many sectors with key levels for you to consider for your positioning.

What Is In This Preview?

1. 10 Charts I Like Into 2024

2. 10 Underperforming Large Caps I Like To Bounce Back

3. Hundreds Of Names And Their Accompanying Options Flow By Sector

4. My Thoughts And A Look At My Positioning

How To Utilize All This Information Below

I don’t get many questions anymore because most of you in here aren’t really new to the market and you’re here for a niche product. With that said many do still email me asking what to do with all this information. The answer is whatever you want. There really isn’t a right answer on how to play off options data. I’m just sharing data on what the biggest players are doing in the options market and lining it up with charts to try and gauge direction to share with you. That’s it. If you see a put sale at X, maybe you want to sell puts on your own at X - $5.

Whatever it is, knowing the levels bigger players are interested in is a very valuable tool. For starters, the goal is to avoid trading weakness. In the history of markets it is rare to see a nice chart that had a ton of accompanying call flow that ended badly. That’s true, you know why? Because weakness comes from broken charts where sellers have been exiting their positions for a very long period. If people spent more time watching the charts and the options flows to help guide their decision making instead of fundamentals, they would avoid a dramatic amount of pain that comes from hopium.

Again the right answer to this question is the community discord. It is an amazing tool that has exceeded even my most optimistic goals. There are 500+ members in there everyday and there are so many places in there where you can ask any question you want and alot of very seasoned investors can help you. There are countless people who manage money for a living in there to guide you on your journey. There are portfolio managers, analysts, vol traders, etc every niche of finance exists within that network and they’re all helpful people with unique skillsets.

Questions you could ask…….

What do you guys think of this chart?

How would you all enter this trade?

Where would you sell puts to enter this name?

Literally any question you have, we all started somewhere. Don’t be ashamed to ask questions if you don’t get something. You can get help if you don’t understand something or want another set of eyes on it. More insights from more investors never hurt anyone. Again, the “Current Trades” section in the discord is probably as valuable a corner of trading as there is on the internet. This isn’t Wall Street Bets on Reddit, it is people who know what they’re doing and utilizing all this data in the right manner. Please, use it, you will be a better trader watching what others are doing with this information.

2023 was viewed by many as a really good year because alot of names were up, but the reality is, most names just normalized returning to 2021 levels. In megacap land Apple,Microsoft, and Nvidia all hit new highs but Google,Amazon, Meta, and Tesla are still well below the highs they achieved over 2 years ago. 2022 was a very odd year for the market with covid and the war in Ukraine causing all sorts of issues with inflation. We are now back on a normal path so to speak but now we still have 3 big question marks ahead of us:

1. What will the fed do

2. What will be the outcome of the 2024 presidential election

3. What will happen with China

On the fed front, 7 rate cuts are being priced in for 2024 right now. 2 weeks back we were talking about maybe 3. If the economy is so strong, why would we need 7 rate cuts? This would be something you’d see in a recession, but I can’t imagine they’ll openly state we are in a recession as that would give Joe Biden no prayer in his re-election bid. So this is the big story into 2024, what will happen to rates and why? It is possible in their soft landing scenario that we cut rates while the economy is strong simply because nobody needs low rates more than our own government who is the biggest borrower in existence. Lots of potential scenarios for equities but they all start with what happens to rates.

On the China front, there are a myriad of issues. The economic data out of China is very bad. It’s easy to dismiss the China/Taiwan issue but we just had President Xi tell Joe Biden this week that Taiwan will be returned to China, peacefully hopefully, but no sane person thinks that is a realistic option. Lastly, what happens to China should Donald Trump win the election? He was very hard on them during his last presidency and I cannot see him being any lighter on them this go around should he win. As of this morning, Donald Trump is the favorite to win the election so the story around China the next few months is a big one to watch.

The SPY is working on an incredible finish to the year, a close over 475 would be the highest monthly close of all time. While this is a bullish setup, until we get that new high, there is always that possibility that this is a lower high and we turn back lower. So a move over 479.98 would be nice to see. As we saw in 2022, where big tech goes, the SPY goes. I don’t see any issues lying ahead with any of the big 7 except Apple with its negative sales growth and Tesla with a myriad of issues, but in general all of the big 7 should generate alot of cash in 2024 which should mostly keep the market elevated as they are 30% of the weighting.

The QQQ looks better than the SPY with tech stocks leading the market this year to new highs on the Nasdaq. There are still a few days left in the year but a close over this trendline would be a bullish look into 2024.

The IWM, small caps, is breaking out of a smaller base, but still 20% from all time highs. Is there a catch up trade here? Possibly, but the majority of names in the IWM are just not good. This is also up over 20% in 2 months, the 200 level has been a big spot it hasn’t closed over since early 2022, it would be a big deal if it could do so.

On the ETF front, the XLY, which is heavily skewed to Amazon and Tesla, remains 20% off its all highs but has a nice look to it.

The XLC, the communications ETF, which is heavily skewed to Google and Meta, is also 20% off from its all time highs and also looks great.

The XLK which is the tech ETF that is heavily skewed to Apple and Microsoft is the only one at all time highs.

The XRT, the retail ETF needs a 50% move to get back to all time highs. It is emerging from an 18 month long base which is a telling sign about the consumer.

The XLE, the energy ETF, does not look good. It’s been 2 years of back and forth in this tight range here. If one wanted to go long this, selling puts at the 65 level looks like a good spot to try and enter.

10 Charts I Like Into 2024

These are names I think have nice setups at the moment, I will add all accompanying options data I have for them as well.