Hawkish Fed Minutes Will Limit Rally Today – Rest Of the Week Looks Bullish

January 4, 2017
Author: Peter Stolcers, Founder of OneOption

Posted 9:00 AM ET - One of my goals this year is to get my comments posted to the blog well before the opening bell. Last week the market gradually drifted lower and it breached minor horizontal support at SPY $225. Trading volumes were extremely light and year-end "window dressing" played a role. Stocks opened with a bang yesterday and they were able to hold gains throughout the day. The SPY finished above $225 and we can lean on that level. Buyers will start to nibble now that support has been established. The S&P 500 is up five points before the open and I will be trading from the long side this morning. The Fed minutes will be released later today. I am expecting hawkish rhetoric and that could keep a lid on today's rally. ADP will be released Thursday morning and analysts are expecting 180,000 new jobs. That is a Goldilocks number and anything within 20,000 jobs would be market friendly. Anything over 220,000 would be very bullish. ISM manufacturing, ISM services and the Unemployment Report will also be released this week. Given the Fed's inclination to raise rates three times this year, economic releases need to be strong. Good news will once again be good news. If the data points start to slip traders will wonder if economic growth is robust enough to shoulder the rate hikes. January is typically a bullish month. As the first week of the year goes, so goes the year. I believe we will see a gradual grind higher this week and we could challenge the all-time high. Be patient on the open today and make sure that the early gains hold. Start scaling into long positions and use SPY $225 as your stop. Swing traders can sell out of the money bullish put spreads and holding a few calls overnight also makes sense. . . image

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