Count Your Money and Your Blessings – Wait For A Dip

Posted 9:30 AM ET - My narrative hasn't changed much this week. The tax bill is priced in and SPY $270 will likely be the high of the year. Stocks rallied out of the gate yesterday and the gains were given back instantly. That is a sign of profit-taking. This is a low probability trading environment. Intraday ranges are collapsing and volume is drying up ahead of Christmas. Politicians need to pass the continuing resolution to avoid a government shutdown. This needs to happen by tomorrow and Democrats are likely to flex their muscles. In January the budget and the debt ceiling will be addressed and the negotiations will get complicated as the "kitchen sink" gets thrown in to the process. When the market can't rally on good news it tells me that a short-term decline is close at hand. The FOMC was dovish, the tax bill was passed by Congress and economic releases have been strong. Unfortunately, the market has not been able to rally on the news. I expect to see some profit-taking in January when the mudslinging in DC gets nasty. After a 20% S&P 500 rally in 2017 some investors will be tempted to take some chips off of the table. That dip will set up an excellent buying opportunity. Swing traders should be on the sidelines. Don't think about trading until we get a dip. We will see choppy, light volume conditions the rest of the year. Day traders should also keep their powder dry. I have a special alert system for high volume stocks with big intraday price spikes. These trades have been providing Day Chat members with excellent opportunities during a quiet market conditions and that will be my focus. Take time off and finish your Christmas shopping. These are very low probability conditions. . .

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