Market Ready To Run – We Bought Calls Yesterday – Ride Them

Posted 9:30 AM - The market continues to look for a catalyst and earnings season will provide the fuel we need to breakout. Tech stocks have pulled back and they have excellent upside. The QQQ bounced off of the 100-day MA Monday. Yesterday I suggested buying calls in the tech sector. Today we are seeing follow-through buying and these positions perform well. Trump will reveal his tax plan and that should set a positive tone for the market. The healthcare bill is dead, the debt ceiling has been extended and the focus will shift to cutting taxes. Any rumors of a deal will spark buying. A Fed rate hike and missile launches in North Korea have temporarily kept a lid on the market. Investors have grown numb to both and overhead resistance at the all-time high will weaken with each passing day. SWING TRADERS SHOULD BE LONG CALLS. If the stock is a component of the QQQ use $141.70 as your stop on a closing basis. For all other stocks use SPY $248 as your stop on a closing basis. The next rally will be the last push higher this year. Day traders should try to get long early in the day. Stocks rebounded yesterday and that momentum is fueling a pre-open rally this morning. Q3 window dressing sparked some rotation out of tech and into other sectors (energy and retail). T+3 settlement means that we've seen the end of window dressing. Tech stocks will run. End of month buying will attract buyers the rest of the week and I am bullish. Stay long and watch for a breakout to new highs in the next week. . .

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