Buy Calls – We Never Got the Dip – Breakout Coming

Posted - 9:30 AM ET - The market had a very strong day Thursday and we are in striking distance of the all-time high. The House passed the tax bill and that sparked buying. Option expiration goosed the market once the momentum was established. There are still some headwinds, but I will buy the breakout. If I see follow-through I will gradually add to positions. The tax bill had a comfortable margin of victory in the House and this news was expected. Republicans only half a two vote edge in the Senate and it will hit a serious snag. A lack of progress will keep a lid on the market and investors will be watching for any signs of a deal. The Fed will hike rates in December, but tightening is supported by solid economic growth. Investors don't seem overly concerned. Earnings season has been excellent and valuations are not overly stretched. Swing traders can jump into action. We are NOT likely to get the dip we were hoping for. The market has gathered strength during the last few weeks and it looks ready to make a run. If the SPY trades above $259, buy calls. If the market closes above $259, add to positions. Use SPY $256.50 as your stop on a closing basis. If I see follow-through buying next week I will continue to add. Day traders should try to get long early today. I believe any weakness near the open will be gobbled up. Use $259 as your guide. All aboard! . .

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