December 20, 2017
Posted 12:00 PM ET - Yesterday we saw a light round of profit-taking. As I mentioned in my comments the headwinds are blowing. A tax bill will get passed this week and that is priced into the market. I still believe that SPY $270 will be where we finish the year. Once Trump signs the tax bill the focus will instantly shift to the continuing resolution. The budget expires Friday and it needs to be postponed to avoid a government shutdown. Democrats will use this opportunity to make Republicans squirm. The message will be clear and Republicans will know that a major battle lies ahead when they come back from recess. The last time we had a government shutdown it came after the GOP had Obamacare rammed down its throat. Trump is headstrong and unpredictable (by his own acclaim). This negotiation could get ugly and it will spark some profit-taking. The Senate needs 60 votes and Democrats have not broken party lines (not one voted for the tax bill). Swing traders should remain in cash. Wait for the dip and be ready to buy. The upside rewards are smaller than the downside risks. Day traders should also stay sidelined. I don't like trading gaps up. Intraday ranges will collapse and trading volume will decline the rest of the week. I have released a new search in my platform that identifies price and volume spikes. We have been making a killing with this tool the last few weeks. PTLA and OSTK were two that we traded yesterday. That is how I plan to spend my day. This is the last leg of the rally. We've had a great year and I don't want to give any of our profits back. Take some time off and enjoy the spirit of the season. Wait for that pullback. . .
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