Market Breaking Out – Use This Key SPY Level As Your Guide Today

Posted 9:30 AM ET - Yesterday the market rally was fueled by the energy sector. Tech stocks finished strong as well and the QQQ blew through horizontal resistance at $166.50. Today the S&P 500 will challenge the 100-day moving average. As long as there aren't any political surprises the market will grind higher. North Korea released three US hostages as a sign of good faith. The meeting with Trump has been set and the tone remains positive. China got Kim Jong Un to the table and that will grease the trade negotiation wheels. I believe Trump's tone with China will be tame as long as North Korea scraps its nuclear program. The Chinese delegation is coming to the US to continue trade negotiations in the next few days. Tuesday we pulled out of the Iran nuclear agreement. This had the potential to spark selling, but a rally ensued. Iran's parliament burned US flags and chanted "death to America" yesterday. Iran subsequently launched missile attacks on Israel from Syria. I don’t see this political event as having much of a market impact, but oil prices are moving higher. Trump has postponed European tariffs and those trade negotiations continue. The EU is fragmented making it harder to strike a deal. Mexico has a NAFTA deal close at hand; they just need to secure their side of the border. All of these political events are moving in the right direction, but conditions can change in an instant. The Fed is dovish and they plan to hike rates two more times this year. Inflation is moderate and they have breathing room (CPI/PPI came in lower than expected today). Economic growth is strong and inflation is moderate. Over time investors will get comfortable with rising yields. I believe we are already seeing that. The economic data continues to be strong. China's official PMI was excellent two weeks ago and their trade numbers were good earlier this week. Domestic economic activity has also been strong. Swing traders should be long QQQ from $163.50. Raise your intraday stop to $166.50. We are going to ride this wave and we will continue to move our stops higher. If the SPY closes above $270, you can add to positions. Day traders should focus on the long side. Make sure the early rally is holding and buy when the SPY crosses $270. Use that as your guide. As long as we are above it focus on longs. A breakout should have legs and you can ride your profits longer with this tailwind. Stay long and look to add. Make sure you protect profits with intraday stops. . .

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