Market Will Challenge All-time High – Hawkish FOMC Minutes Ignored

January 6, 2017
Author: Peter Stolcers, Founder of OneOption

Posted 9:00 AM ET - Last week the market breached minor support at SPY $225. We saw a light round of profit-taking and window dressing also played a role. Stocks bounced this week and now that we are back above $225 we will lean on that level. I still believe the market will challenge the all-time high in the next few days. The S&P 500 was a little soft yesterday. Traders tested the bid after hawkish Fed Minutes Wednesday afternoon. Stocks rallied back late in the day and I consider this price action bullish. ADP was a little light earlier in the week (156K) and the Unemployment Report was light today (144K). The futures rallied 3 points and some traders might feel that this will put the Fed back on its heels for a few months. I'm not overly concerned by this number, but I would like to see job growth surpass 200,000 per month in the near future. ISM manufacturing and ISM services were very strong this week. Trump's economic policies will boost corporate profits. We are also seeing gradual economic improvement in Europe and Asia. The backdrop is bullish. Buy dips and carry some overnight long positions with the intent of adding once the market makes a new high. I liked the dip yesterday and the late rally. Buyers will be a little more aggressive today since the bid has been tested. I will start scaling into bullish day trades early today. If the market makes a new high after the first hour, we will grind higher the rest of the day. We might even challenge the all-time high. The downside is fairly limited today since support was established yesterday. I doubt we will trade below SPY $225.50 today. If we do dip, try to get long around that support level. The downside will be relatively limited at $225.50 (bigger support SPY $225) and your upside is excellent. I launched a new Options Chat Room and there are 2 new call trades that will trigger today. Take the free 1-Week Trial. Get long. . . image

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