Buy Calls – Buyers Are Back Ahead of Earnings Season

Posted 9:00 AM ET - Yesterday the market staged an early rally and it was able to hold on to gains. The small pullback was brief and shallow indicating that the bid is strong. I'm going to sell bullish put spreads and buy some calls today. Janet Yellen will testify before Congress and we can expect hawkish comments. This should already be priced and the market and any dip will be a buying opportunity. Earnings season is approaching and tech stocks will rebound. Swing traders can buy QQQ calls. Use $138 as your stop on a closing basis. Move your stop up to $139.50 on a closing basis if the QQQ finishes above it. I also like selling out of the money bullish put spreads. Just make sure that the options expire before earnings are announced. Also make sure that technical support lies between the stock price and the short strike price. If technical support is breached, buy back the put spreads. Day traders should try to get long early this morning. The SPY is above resistance at $242 and you can lean on that. There will be minor resistance at $243 but we should be able to get through that. Oil is up this morning and financials look decent. This is a good backdrop for the market. Politicians are not likely to get anything done before recess and that will eventually weigh on the market. The threat of another rate hike in September will spook investors once earnings season peaks. We don't need to worry about that just yet. We should have a few good weeks of upward bias. Get long. . .

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