Market Will Bounce and Stall – FOMC Minutes Wednesday

Posted 9:30 AM ET - Last week the market dropped below support at SPY $246. Once that level was breached buyers pulled bids and bullish speculators were flushed out. Stocks stabilize Friday and we are seeing a nice bounce this morning. Not much has changed over the weekend. The economic news remains light and the FOMC minutes on Wednesday will be the highlight. China's industrial production and retail sales were little soft this morning. Earnings season is winding down. The Fed and Congress are in recess. Investors typically get nervous when no one is “minding the shop”. Swing traders can sell a few bullish put spreads on strong stocks today. Look for technical support between the stock price and the short strike price. If that support level is breached, buy back the put spread. I believe the market will rebound a little and it will compress during the next two weeks. This is typically a bearish part of the year so I would keep my size small. If the market is able to challenge the all-time high, a nice shorting opportunity will present itself in September. Day traders should look for an opportunity to get long early this morning. Make sure that the opening rally does not fail. Support is at the 50-day MA ($244.56) and resistance is at $246. Set passive targets and know that trading volumes will be relatively light. These one-day market declines have a tendency to reverse quickly. Favor the long side this week. . .

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