April 19, 2018
Posted 9:30 AM ET - Yesterday the market was able to tread water and this is the second day the S&P 500 has closed above the 100-day moving average. This is a bullish sign, but the price action still feels very tenuous. Use the 100-day moving average as your guide. Stocks will probe for support early today. Taiwan Semiconductor (TSM) warned and soft smartphone orders were to blame. That is putting pressure on Apple and other tech stocks. This is the problem du jour. This earnings bounce will last a couple of weeks, but the headwinds will be strong. The market has to prove itself every day before buyers step in. Earnings season is just starting to crank up. Results should be excellent, but the expectations are high. There is not much margin for error. This 10% correction has everyone spooked and the action has been random because it is largely dictated by political news. The political news has settled down and we should get a break for a couple of weeks. The economic news has been strong. Swing traders should be long XLF and XLE. Use the 100-day moving average on the SPY as your stop on a closing basis. These two sectors should perform well relative to the market. Day traders need to keep an eye on the SPY 100-day moving average. Watch for support at that level and look for an opportunity to buy stocks with relative strength. If that support fails, exit your longs and start looking for shorts. This is a day traders market and the market could swing either way. The longer market stays above $269.70, the stronger that support level will become. If it fails this week it will be confirmed as a resistance level.
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