Eye On The "First Five Days of January" Rule

Good Wednesday Morning, MPTraders!  January 3, 2024-- Pre-Market Update: Trading Day #2 for 2024. Yesterday, the first session of the new year, Cash SPX ended the session 27 points (1%) in the hole. At the moment, ES futures are down about 16 points, suggesting that the Cash SPX could open today's session closer to 43 points in the hole to start the new year.

The reason why the two-day deficit matters is based on the First Five Days of January rule. Since 1950, if the first 5 days of January are higher than the previous year's close, there is an 83% probability that the forthcoming year will end higher. 

Yeah, Hocus Pocus, right?  Well, think of it this way: Many fund managers use seasonal tendencies to determine their allocations at the start of the year. If the first 5 days are up, then the allocations to long positions are greater and undertaken with more conviction for the intermediate term, whereas a negative SPX after 5 trading days elicits a lower commitment from PMs at the beginning of the new year...

Let's play the game until next Monday's close...

Today's Economic Catalyst: At 2 PM ET, the FOMC Minutes (Dec. 13, 2023 meeting) will be released...

As for ES, my attached hourly chart (below the Cash SPX Daily Chart) shows that this AM's spike low at 4765.50 fully and so far, successfully tested yesterday's low (also 4765.50) after Mr. Market relinquished all of yesterday's late-session 24 point rip during the final 20 minutes of trading. My near term pattern and momentum set ups continue to identify the 4743 to 4755 support zone as the next optimal (up) turn window. 

For the 4765.50 lows to confirm a near-term Double Bottom-- and the conclusion of a correction from the 12/27/23 high at 4841.50, ES needs to climb and sustain above 4790, and then follow-through above 4797. 

In the absence of such near-term strength, I will be expecting ES to loop down to violate 4765.50, and then to probe the 4743.25 to 4755.50 support/turn window zone, from where renewed buying interest should emerge... Last is 4771.25

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