Stay Long – Focus Is On Profits – Use This SPY Level As Your Stop

Posted 9:30 AM ET - Yesterday the market gapped above its 50-Day MA and the SPY pushed through the 100-day moving average. Buyers are focused on earnings and political headlines have subsided temporarily. We've seen very heavy selling the last two months and the price action is tenuous. For the time being sellers have backed off and I expect this bounce to last through April. President Trump met with North Korean leader Kim Jong Un and the talks went smoothly. For the time being, this dark cloud has parted. Many other dark clouds (FBI raid on Cohen, Chinese tariffs, Syria and the Mueller investigation) still loom. Economic releases indicate strong growth. Retail sales were up .6% and consumers are spending. The Beige Book will be released this afternoon and I'm expecting to see strong growth across every region. Earnings season is off to a good start. Profits are expected to rise 18% this quarter and that will calm investors. The FOMC does not meet for three weeks. A number of officials will be speaking today. I believe the comments will be balanced (market neutral). Now that the S&P 500 has broken through technical resistance we can lean on the 100-day MA. Swing traders should stay long XLE and XLF if the SPY closes above the 100-Day MA. Use the SPY as your stop on a closing basis. Financial stocks have not jumped and I believe they're waiting to see if Congress repeals Frank/Dodd. Day traders should look for an opportunity to get long. Treat every opening gap higher with caution. We have seen these early moves reverse. If the gains hold for the first hour we are likely to grind higher. If by chance the SPY trades below the 100-day moving average, look for opportunities to get short. I don't believe this will happen, but in today's news driven environment anything is possible. Look for a tenuous grind higher the next two weeks. . .

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