Dip Was Shallow – Market Will Consolidate Gains For A Few Days – Stay Long

January 11, 2018
Author: Peter Stolcers, Founder of OneOption
Author
Pete

Posted 9:30 AM ET - Yesterday the market pulled back after a huge week. The bid is still strong and stocks rebounded. This price action suggests that we need to consolidate gains at this level. I expect to see resistance on big rallies and support on dips. Once earnings releases start cranking up the market will have the fuel it needs to move higher. Economic data points have been excellent and earnings guidance is strong. The Fed will hike three times this year and the market is comfortable with that. North Korea will participate in the Olympics and we should get a missile testing reprieve. The budget is likely to be extended so that it coincides with the debt ceiling. Asset Managers will give politicians the benefit of the doubt. They won't sell stocks until an actual shutdown occurs. Since the budget deadline is likely to get pushed back, we don't have to worry about this until February. Swing traders should maintain call positions. Use SPY $273 as your stop on a closing basis. I expect to see a compression this week and a grind higher next week. Day traders had an opportunity to buy the dip yesterday. I mentioned it would be brief and shallow. Stocks continued to rebound the entire day and the market is up this morning. Trade from the long side. Bears are not going to be aggressive when the market is making a new all-time high. Stay long and trail your stops. . . image

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