Market Ready For Next Leg Higher – Close Above SPY $273 Would Be Bullish

Posted 9:30 AM ET - The market staged a nasty reversal after the FOMC minutes Wednesday. These reversals are usually not resolved until the bid is tested. The bounce looked great yesterday, but we saw selling late in the day. Stocks did bounce in the remaining minutes and the market is up this morning. This choppy action is part of the bottoming process and I believe the selling pressure has run its course. We are poised for a leg higher. The gap from February 15th has been filled and support at SPY $269.60 has been tested/confirmed. The pattern of higher opens and lower closes should end today. I believe we will see a nice rally and a close above SPY $273. That would be a new closing high for this bounce and it would be bullish. If the momentum picks up today we could hit my target of $274 that I mentioned earlier in the week. The FOMC minutes were balanced (market wanted dovish) and Fed Officials will calm nerves with dovish rhetoric today (testimony before Congress today). Only three rate increases are projected this year and the market will be able to shoulder this. Earnings are excellent and economic growth is strong. Swing traders should use the 100-day moving average as a stop on a closing basis. The bid has been tested and the launch pad has been built for the next leg higher. If you have been patiently waiting for an opportunity to get long, buy calls if the SPY closes above $273 today. Day traders should be cautious early. Gaps higher have been faded and we need to make sure the bid is real. Once support has been established buy stocks with relative strength. Bonds are up this morning and oil is stable. I believe we are going to have a nice rally and follow through buying next week. . .

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