Focus Will Shift To Economic Growth Next Week – Good News Is Good News

Posted 9:00 AM ET - Yesterday the market continued to grind higher. The action was light but positive. Stocks are lower this morning and they should find support. China's PMI was better than expected and many analysts are raising GDP estimates. Europe and Japan were also solid. Domestic economic activity will be in focus next week. ADP, ISM manufacturing, ISM services and the jobs report will be released. “Good news is good news” and we need strong numbers. Earnings season will begin in two weeks. Q4 was good and CEOs are optimistic. Pre-announcement warnings should be minimal and stocks should rally into earnings. The conservative right doesn't like the threat of Trump reaching across the aisle. From my perspective, this is critically important. The far left and the far right have paralyzed the country for far too long. Trump (and every future president) needs to work the middle. Instead of threatening the Freedom Caucus he should just start courting Democrats (meetings not tweets). He will look for low hanging fruit so that he can get some points on the board. Any tax cut no matter how minor will have a positive impact on the market. For the time being the focus will be on economic releases and earnings season. Swing traders should be long calls. If the market trades above the first hour high, add to positions. Yesterday's rally gave us a little breathing room and you should keep your stop at SPY $235 on a closing basis. Day traders should look for early support. Oil has stabilized and financials were strong yesterday. Both are critical to a market rally and they look stable this morning. Strong markets tend to open lower and finish higher. If this pattern continues we will challenge the high next week. Let the market come in, wait for support and use SPY $235 as your guide. Look for opportunities to add to long positions. . .

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