May 8, 2018
Posted 9:30 AM ET - Yesterday the S&P 500 treaded water right in the middle of its range between the 100-day and the 200-day moving averages. The volatility is starting to settle down and some of the threats to this rally are being resolved. This basing process is going to take time, but conditions are gradually improving. The news of the day will be Trump's decision on the Iran nuclear deal. Most analysts believe that the US will withdraw and this is already priced into the market. His tone could be inflammatory and that could spark some selling. Europe wants to keep the deal in place because they buy their oil from Iran. Without the help of the EU, economic sanctions would be useless. Talks with North Korea will take place in the next month. Missile tests have been halted and that should continue through the negotiations. Trade negotiations are taking place with Mexico, the EU and China. A possible trade war is keeping investors on edge. Trump has granted the EU more time and his delegation returned from China. Talks are underway and the negotiations seem to be making progress. According to Trump a NAFTA deal could be signed right away if Mexico agrees to secure its side of the border. All of the political uncertainty is subsiding, but one ill-advised tweet can spark a 50 point S&P decline. Swing trading this market is like walking through a mine field. Economic releases have been strong and earnings are excellent. The Fed will hike two more times this year (dovish) and they have breathing room (inflation is moderating). Swing traders are long the QQQ at $163.50. Use that entry as your stop on an intraday basis. I don't want to lose money on this trade. Tech stocks are strong relative to the S&P 500. Day traders should wait for the momentum to establish itself. Use the first hour range as your guide and go with the flow. We should see some decent movement today after Trump's press conference. Look for choppy price action between the major moving averages for the next few weeks. Once the trade deals are finalized the market will rally. . .
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