January 9, 2018
Posted 9:30 AM ET - The market staged a powerful breakout last week and the momentum continues. This rally has been marked by overnight strength and tight intraday ranges. Earnings season will begin this week and the bid should be strong. Politicians need to pass a budget and the deadline is approaching. This is the only potential speed bump. Democrats will flex their muscles during the negotiation. They know that 60 votes are needed in the Senate and that Republicans only have 51 votes (if all Republicans vote along party lines). The debt ceiling is approaching as well, but the government has enough money to last through February. If the process gets ugly the budget will be extended for a few weeks and then DC will have to address both. Democrats want an easy path to citizenship for "dreamers". Republicans want "the wall" and an end to chain migration. It seems like they should be able to find middle ground… but you never know. The economic news has been good (ISM services, ISM manufacturing and ADP). Inflation is below Fed targets and the last statement was fairly dovish. Swing traders should hold on to call positions. Raise your stop to $272 on a closing basis. This is a swing trading environment and we have momentum. Day traders need to tread cautiously because of tight intraday ranges. Most of my trading is focused on overnights. If we get an intraday dip, I will look for an opportunity to day trade from the long side. We haven't had many dips so far this year. Retail and energy have been grinding higher. The momentum is strong and it should continue through the week. . .
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