Market Should Grind Higher Today – Buyers Scooped Stocks On Support Thurs

Posted 9:00 AM ET - In my comments yesterday I advised you to buy dips. Support was tested at SPY $225 and when we rallied back above $225.50 we got long. That was an excellent buying opportunity and we made a ton of money in the day trading chat room. Don't read too much into the recent price action. The market is trapped in a range and it is searching for a "driver". Earnings season has started and big banks reported this morning. The reaction has been favorable and this sector could be the catalyst that sends the S&P 500 to a new high. This year the Fed expects to hike three times and that is good for the financial sector. Mega cap tech stocks always attract buyers ahead of earnings releases and the bid will grow next week. Job growth has been slow, but other economic indicators have been strong (ISM manufacturing and ISM services). Economic activity in China and Europe is also improving. Companies are optimistic and that will come out in their guidance. The promise of lower corporate taxes and reduced business regulation has them upbeat. Good news is priced in and we will see if Trump can deliver. I'm not looking out more than a couple of months, but I expect the first quarter to be bullish. Swing traders can buy dips, but keep your overnight long positions at a moderate level. Don't load up until the market breaks out to a new all-time high and we have follow-through for a couple of days. Day traders should focus on the long side today. If we get above the first hour high I will add to my long positions and I will use that level as my stop if we retreat. If the rally stalls I will start taking profits. The market has no momentum. We are trapped in this range and when an intraday move stalls, we reverse. This has happened every day this week. Ideally, the market will probe for support early in the day. This has been the best day trading environment for us. Relative strength is much easier to spot and once market support is established these stocks jump. I don't think we will see much of a pullback this morning because of the strong buying we saw off of support yesterday. Look for early nervousness and a gradual grind higher. I expect to see a nice little rally today in quiet trading ahead of a 3 day weekend. . .

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