Market Has A Full Head Of Steam – Ride Your Calls and Raise Stops

Posted 9:50 AM ET - There wasn't any news over the weekend to deter investors. Even the threat of a government shutdown this Friday has not dampening spirits. With the exception of one day this year the market has opened higher and closed higher than the open. This is an extremely bullish pattern and you can see it in the green candle sticks each day. A government shutdown is the only potential speed bump and it is unlikely. Republicans and Democrats are ramping up their rhetoric and the budget needs to be extended this Friday. DACA and immigration are big issues and Congress will need more time for negotiations if they are going to be lumped into the budget. The rhetoric will be heated, but the market won't care until an actual shutdown occurs. I believe politicians will extend the budget into February and it will coincide with the debt ceiling. Then things could get ugly. Missile tests in North Korea are another "fly in the ointment", but they should not be a factor until the Olympics are over. The biggest threat to the market is always credit. Global economic conditions are strong and there are no signs that this will be an issue any time soon. Earnings season has kicked off and the results have been excellent. The announcements will ramp up this week, but they won't climax for a while. The tax cuts are having an enormous impact. Valuations (P/E ratios) are still attractive and companies are investing in plant and equipment. Economic releases have been excellent and the Fed's rhetoric under new leadership (Powell) has been dovish. We are seeing more hawkish comments from the ECB and global interest rates are moving higher. An upward sloping yield curve is market friendly. Wages have started to climb and consumer confidence is already at an all-time high. Swing traders should maintain call positions. Keep raising your stop and use SPY $277 as your guide on a closing basis. At some point the market will pause to consolidate gains and it could happen later this week. Day traders need to tread cautiously when the market gaps higher. We often see compressed intraday ranges and this market is more conducive to swing trading. Ride this wave and trail your stops higher. Look for heated rhetoric in DC this week and a pause in the rally Thursday. . .

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