Buy Dips – Market Will Rally To All-time High In the Next Few Days

Posted 9:00 AM ET - In my market comments yesterday I told you that the backdrop was bullish. Trading volume was brisk and this was one of the best days we've seen in weeks I'm expecting follow-through buying the rest of the week. The S&P 500 drifted lower last week and we saw a light round of profit-taking into year-end. Support at SPY $225 was breached and we rallied back above it Tuesday. Wednesday morning I did not wait long before I started buying and the grind higher was very steady. Hawkish FOMC minutes did not deter buyers and the futures rallied 4 points after the release. This is very bullish price action. Given the Fed's intentions to hike three times this year we need strong economic growth so that the market can shoulder higher interest rates. We did not get that this morning. ADP said that 156,000 new jobs were created in the private sector during the month of December. This is considerably less than the 180,000 that was expected. The S&P 500 is down four points before the open. There is still time before the next rate hike and we want to see improving activity and job growth. I don't view this number as being particularly bearish since some traders will expect the Fed's timetable to move back. The first week of the year is typically bullish and it sets the tone for the entire year. Look for a gradual grind higher today and tomorrow. We love down opens. It's easier for us to spot relative strength and we can wait for market support to be established. I don't think this dip will last for a long. Buyers were ready to scoop up stocks yesterday and the bid is strong. I will be buying stocks early this morning. Oil inventories saw their largest draw since September. That bodes well for oil prices and energy stocks should be in favor today. Basic material stocks have been strong relative to tech. Buy dips and look for opportunities to get long. Use SPY $225 as your guide. If we fall below that support level exit your long positions. Resistance is at SPY $228 and we could challenge the all-time high this week. Swing traders can carry some overnight call positions. The chances of the big overnight decline are small. . .

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