Buy Dips and Ignore the Media – Market Will Breakout As Earnings Crank Up

January 17, 2017
Author: Peter Stolcers, Founder of OneOption

Posted 8:30 AM ET - The market is going to have to shrug off nervous jitters after a three-day weekend. Stocks are poised to open lower and the S&P 500 is down 10 points before the open. Support at spy $225 will be tested and that level needs to hold. The market is in a tight range and I would not read too much into the daily price movement until it breaks out one way or the other. Asian markets were weak and that is spilling over to other markets. We will get a round of economic data (IP, retail sales, GDP) on Friday and we will be able to gauge China's growth. Recent data points have been improving. The IMF and China believe that growth will be 6.5% this year. The headline today is that Trump will take office on January 20th and the country will fall apart the next day. International trade wars, Putin, China currency manipulation, NATO and border taxes are topics this morning. Trump is unconventional and that makes politicians/investors nervous. We do not know how successful he will be in executing his plan and the effects of the policies will not be known for many months. Good news is priced in and he has to deliver in Q1. I believe the market is more nervous about the FOMC meeting on February 1. The Fed plans to raise rates three times this year. That is fairly aggressive and Janet Yellen might be more willing to hike since she is on her way out later this year. Fed officials are very divided on monetary policy. Earnings season will crank up this week and that will be our focus. Results should be good and guidance will be optimistic. Shorts are always very passive before mega cap tech announcements. I love down opens and I will trade from the long side as soon as support is established. I am expecting SPY $225 to hold. Gold looks good today. Swing traders need to be patient. You can own a few calls overnight, but keep your size small and make sure the stocks you are in have relative strength. Once the market breaks out to a new all-time high weekend add to overnight call positions. Don't be distracted by the "worry warts" this morning. The media hates Trump and every news story has a negative slant. I don't trust the media and I never have. Gather your own data and draw your own conclusions - you’ll be much better off. Most market moves are “noise”, but the media creates a reason for every one of them. Dips will be brief and shallow. The promise of lower corporate taxes and reduced business regulation will keep investors engaged. A tax holiday for repatriation of offshore funds would spark US business investment. These are powerful forces and they will keep a bid to the market. Global credit risks are low and any pullback will represent a buying opportunity. Be patient and wait for support today. Look for opportunities to get long. It is critical that the market closes above SPY $225. If that level fails, exit overnight long positions and wait to get back in at better levels. . . image

Daily Bulletin Continues...

Want Full Access?

Become a Member

Start Free Trial

No credit card required.


Previous Bulletin

January 13, 2017

Next Bulletin

January 18, 2017