Market Has 2 Big Support Levels – Don’t Get Short Until They Fail – Fed Watch

NEW DAY TRADES FOR MONDAY - CLICK TO WATCH THIS SHORT VIDEO Posted 8:30 AM ET - Last week the market rallied through two major resistance levels. It is above the 100-day moving average and the 200-day moving average. We have these support levels to lean on this week. Central banks have been printing money like mad. The BOJ pushed rates into negative territory a few weeks ago and China has been pumping liquidity into its banking system. Last week the ECB lowered rates by 10 basis points and increased asset purchases. These actions will not stimulate economic growth and this "sugar high" will quickly run out of steam. China posted dismal economic results over the weekend. Industrial production was up 5.4% and retail sales were up 10.2%. These numbers slipped from last month and the trend has been lower. The FOMC statement will be published Wednesday afternoon. The Fed will not hike rates in the next six months and they might not hike at all this year. The "hot" jobs report could spark a little selling ahead of the release. Cyclical stocks have rallied in the last few weeks and the move feels like short covering. I am not seeing any sustained signs of global economic growth. Mega cap tech stocks led the charge last year and they have been very sluggish. I don't believe the market will move higher without them. I am bearish and I am patient. This rally needs to run its course and now we have two major support levels to use as our guide. If the market falls below the 200-day moving average, I will by puts. If the market falls below the 100-day moving average I will add to positions. That might happen this week for it could take a few weeks. If the market can stay above these major support levels for at least a week, I will consider selling some out of the money bullish put spreads. This options trading strategy allows me to distance myself from the action and to take advantage of time decay. I will focus on day trading this week and I will use the first hour range as my guide. The market has rallied well off of its lows and there are excellent opportunities on both sides of the market. The news is light this week and we will be dead till the Fed. The price action will be choppy so I'm going to trim my size. Make sure to watch the video I posted at the start of the blog. It has a number of nice shorts in it and you can get a feel for the pattern we trade. Take the free trial and I'll show you how we make money every day. . .

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