New Market High – 1-Day Rally Feels Good – This Is Not the Price Action We Need – Wait For Clarity

Posted 10:00 AM ET - Yesterday, all of the major indices made new all-time highs. The market had the news it needed to breakout. I sold my calls last week and I did not participate in the move. I have no regrets and I still question this rally. Everyone was calling for NASDAQ 5000 and now we have it. This surge could lead to profit-taking. Bullish sentiment is very high and speculators need to get flushed out. From a trading standpoint, I need momentum when I am buying options and I still don't feel it. Stocks flat-lined for a week on low volume and time decay became an issue. These one day rallies feel good, but they are not the price action we are looking for. What we need now is a pullback. That would help us gauge profit-taking and once bullish speculators are flushed out, we can gauge how aggressive buyers are. Domestic economic releases have been a little soft. ISM manufacturing was in line and tomorrow ADP and ISM services will be released. The big news will come Friday when the Unemployment Report is posted. Analysts are expecting 235,000 new jobs and anything north of that will spark tightening fears. Official PMI's in Europe and Asia were decent and China lowered interest rates by .25%. The ECB will start purchasing bonds next week and QE will begin. Greece has its loan extension and it won't be an issue for at least a few weeks. Germany posted strong retail sales and that has their market trading higher. An open on the low and a close on the high today would be constructive. I want this breakout to gain traction; I'm just not feeling it. I will continue to day trade. Until I see follow-through for a few days in a row, I won't buy call options for an overnight position. Be patient and wait for a pullback or back-to-back rallies with afternoon strength. The volume is light and the price action has been stale. We need clarity. Once we have it, we can start taking overnight positions. . .

Daily Bulletin Continues...