Market Is Range Bound – Buyers and Sellers Are Paired Off. Wait For A Breakout

Posted at 9:00 AM ET (Pre-Open) - The market had has been whip sawing in a tight range the last couple of weeks. Support is strong at SPY $185 and resistance is strong at $187.50. This is a very low probability trading environment and you should stay sidelined until we breakout/breakdown. The S&P 500 has opened higher and reversed each of the last three days. I have been day trading this move and if I don't see follow-through buying, I will fade this morning's rally. I am out of my put positions and I will not enter any overnight trades until we breakout. Traders have been willing to put a positive spin on every piece of news. China's flash PMI was weaker than expected, but the focus has been on the new fiscal spending programs. There are no new investment trust defaults so China's shadow banking concerns are not an issue - for now. The ECB is worried about disinflation, but the focus is on Draghi's statement that he will push interest rates into negative territory to encourage spending. US economic data has been soft, but bad weather is to blame. The Fed continues to taper, but that must be a sign of economic strength. Brazil's credit was downgraded by two notches (just above junk), but credit concerns won't spread past South America. Russia annexed Crimea, but most believe they will not advance further. As you can see, there are plenty of issues. Earning season is approaching and we might have one more good push higher before May. The market is struggling to make a new high and this is a sign of exhaustion. Durable goods orders were in line, but ex-autos the number came in a little lower than expected. This is a volatile report and it will not have much of a bearing on the market. GDP in initial claims will be released tomorrow. I am not expecting any surprises. Buyers and sellers are paired off. That is why the price action has been so choppy. It does not make sense to take any new positions until this is resolved one way or the other. I will be day trading until we breach $185 or $187.50. Keep your size small. . .

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