Look For A Strong Market Rally Through Monday

December 28, 2018
Author: Peter Stolcers, Founder of OneOption

Posted 8:00 AM ET - Yesterday stocks struggled to hold the gains from Wednesday. The S&P 500 was down 30 points on the open and buyers were not going to step up until they knew the bid was strong. A steady drift lower lasted most of the day and the gains from Wednesday were almost erased. During the last 90 minutes of trading buyers grabbed everything they could get their hands on and the S&P 500 rallied 60 points off of its low. This is the second day in a row we've seen late day buying. Before you get too excited, this is only a bounce. Asset Managers are "window dressing" into year-end. Any bid will spark massive short covering and the gains will ease some of the pain when investors look at their year-end portfolio value. Asset management fees are based on a percentage of asset value so it is in everyone’s interest to have a strong finish to the year. I believe the market will surge higher today and Monday. Once this bounce stalls, the market will retreat. My target is SPY $261 and I will exit my long positions before the close Monday. All of the problems still exist (hawkish Fed, trade disputes with China, slowing global economic growth, tough earnings comps and the government shutdown). I believe that China's PMI will be light next week and that will spark selling. I plan to be on the sidelines or short when that number comes out. Swing traders should stay on the sidelines. The market trend has changed and we are below all of the major moving averages. Our best opportunity will be on the short side. Severe technical damage has occurred and this base will take months to form. Day traders should wait for the bid to be tested this morning. Early rallies have been faded and we saw that yesterday. I believe any dip will be shallow and brief this morning. This is the second consecutive day where we have seen a sharp intraday reversal and strong buying into the close. This is what Asset Managers needed to see and they will be buying today. My 1Option indicator has been incredible for day trading the S&P 500 emini futures contract. Yesterday I made over 40 S&P 500 points and I believe the same is possible today. If you are a day trader you should take my one-week trial. TAKE THE 1 WEEK TRIAL Look for strong upward movement the next two days and a possible rally to SPY $261. . . image

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