Nice Market Rally Today – If Trump Succeeds We All Win

Posted 9:00 AM ET - The market continues to search for a driver and the S&P 500 has not been able to breakout of this 10 point range in two weeks. Yesterday we saw some nervous jitters ahead of Trump's inauguration, but I wouldn't read too much into the price action. China's industrial production, retail sales and GDP were all decent. Europe started off on a weak note and it is starting to grind higher. Oil is up this morning along with the S&P 500. Earnings season will be in high gear next Wednesday and that should attract buyers. Q4 results will be good and guidance should be optimistic. Lower corporate taxes and reduced business regulation will boost profits this year. Good news is priced in and investors will gauge Trump's success in coming months. He will face stiff opposition and we will see if he's able to deliver. The FOMC meeting on February 1 is a potential speed bump. The Fed plans to raise rates three times this year with the first hike expected in June. This is an aggressive agenda and investors will be worried that economic growth is not robust enough to shoulder this level of tightening. Janet Yellen's term is up in one year and there are other Fed positions that will open up as well. The market will closely scrutinize these selections and it never likes uncertainty. Stocks have a nice backdrop to rally today, but I urge you to be cautious. If the market continues to grind higher and it is above the first hour high, you can day trade from the long side with confidence. Use that first hour high as your stop. Keep in mind that early rallies have had a tendency to reverse this week. Swing traders can own a few overnight calls on strong stocks, but don't load up. This is a time to keep your size small. Until the market breaks out to a new all-time high with follow through buying, keep your size small. When you are a premium buyer, you need a market tailwind and we don't have one. Time decay steadily chips away at option premiums while you wait. Donald Trump's acceptance speech should be presidential and patriotic. I'm not expecting anything controversial and the reaction should be market friendly. Look for trading volumes to gradually improve next week as earnings season kicks into high gear. The price action today should be bullish. Once I know that the bid is strong I will start scaling into long positions. I don't plan on trading the first 30 minutes. I'm still expecting an all-time high for the S&P 500 before the end of the month. If Donald Trump succeeds, we all win. I wish him well. . .

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