SPY Makes A New High – Overnight News Was Excellent – Rally Will Continue

Posted 9:45 AM ET - Yesterday, the market broke out to a new all-time high. The overnight news was excellent and the rally will continue today. Mega cap tech stocks continue to exceed expectations (Intel, Apple and Microsoft). Today we can add Facebook to the list. They blew away estimates and the stock is up 7% overnight. This is important because tech has made a nice run and we need these stocks to tread water. Healthcare has also been strong. HMOs are posting good results and biotech's are back in play. Biogen jumped higher yesterday and Gilead is moving higher today. Cyclical stocks are also catching a bid. 3M posted results this morning and the stock is trading higher. Global flash PMI's were strong and that will also fuel these stocks. China posted a better-than-expected flash PMI, but Europe was the real surprise. Their activity rebounded from a recent soft patch and the flash PMI came in at 52. The only thing that can stand in the way of this rally is a credit crisis and I don't see any immediate threats. The conflicts in the Ukraine and in the Middle East have not spooked investors. We will see some jitters from time to time, but any related dip will represent a buying opportunity. Next week we will get a number of major economic releases (ADP, GDP, ISM manufacturing, ISM services and the Unemployment Report). We will also hear from the Fed. I am expecting solid economic results and dovish statements from the FOMC. I don’t think they will move the tightening table up before the recess in August. We bought some calls last week and they are in nice shape. Given the breakout yesterday and the favorable overnight news, I will be buying more calls today. Raise your stop to SPY $198. Stay long and look for opportunities to add. This rally should continue through the end of the month. . .

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