January 24, 2018
Posted 9:30 AM ET - Earnings season is starting to crank up and profits have been excellent. Guidance is robust and corporate tax cuts are prompting domestic expansion. The market continues to grind higher and mega cap tech stocks have yet to report. Flash PMI's were good this morning. Global economic growth is strong. President Trump will speak at a conference in Davos. Most analysts believe the rhetoric will focus on fair trade practices. His commitment to "America first" will not be popular with world leaders. Global interest rates are creeping higher and central banks are hawkish. The FOMC will meet in one week and the recent market run-up could spark hawkish comments. Powell's transition as the new Fed Chairman has been well received by the market. Higher interest rates and an upward sloping yield curve are bullish as long as economic growth is strong. Bond yields are still near historic lows so there is plenty of room for them to move higher before interest rates become an issue. The budget was extended 2 weeks. Schumer has egg on his face and funding for "the wall" is off the table.... for now. This will be a heated battle. Swing traders should raise their stop to SPY $282 on a closing basis. The market momentum is extremely strong and any dip has been instantly gobbled up. This rally has more room. Day traders need to be careful on opening gaps higher. If there is going to be a reversal you will see steady selling right from the opening bell. I don't sense a reversal today. Let the market bid establish itself and when the market starts to grind higher join the rally. Big overnight gaps have led to tight intraday ranges. Stay long and raise your stops. . .
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