February 6, 2020
Posted 9:30 AM ET - Yesterday the market jumped higher on strong employment data and a solid ISM services report. China believes it has found an effective treatment for the Coronavirus and that is calming investors. The S&P 500 made a new all-time closing high and will add to those gains this morning. Domestic economic conditions have been excellent and ADP reported the largest job growth in the private sector in five years (291,000). Tomorrow's Unemployment Report should also be excellent. The Fed will remain dovish due to the Coronavirus and signs of disinflation. China announced that it will cut tariffs on $75 billion worth of US goods by 50%. This is in line with the Phase 1 trade agreement. They are asking for some concessions on their commitment to buy US goods because of the Coronavirus. The death toll has reached 600 and 25,000 people have the virus. Without question this will have a major economic impact, but the market is looking past its temporary event. As expected, President Trump was acquitted. The impeachment trial has not had any market impact. He will have a press conference at noon Eastern time today. Swing traders should be long SPY around the $332.25 level. We did not buy early in the day and we waited for the new high. Stocks have been extremely resilient during the coronavirus outbreak. When we did not see sustained selling on the news it confirmed the strength of the market bid. In less than a week the S&P 500 has climbed 130 points. I suggest aggressively selling bullish put spreads and you should try and allocate 50% of your capital this week. Last night I released my weekly swing trading video and I highlighted eight excellent bullish put spreads. Monitor those stocks for relative strength and try to enter the trades early today. I am not looking for a melt-up, but I believe that very least the S&P 500 will tread water at the high and a slow grind higher is very possible. That type of market action bodes well for bullish put spreads. I selected strong stocks that have reported earnings and we will sell out of the money bullish put spreads below technical support. We will place a stop below that technical support and we will let time decay work its magic. I'm not looking for a lot of market volatility in the next two months and this will be our primary options trading strategy. . . . TRY OUR RESEARCH FREE TODAY - GET THE 8 BULLISH PUT SPREADS NOW . . . Day traders should watch the price action in the first 30 minutes. I believe we will probe for support and then rally off of that level to a new high. We've seen this pattern the last few days and it should continue on the heels of excellent economic news this week. Look for strong stocks to buy. SPY $328 is the support level we want to hold and we will raise our stop as the market moves higher. Get long.
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