Trading Will Be Great In 2017 – Buy On Support At SPY $221

Posted 9:00 AM ET - Happy New Year! 2017 is going to be fantastic for trading. Trump likes to keep everyone off balance and that spells market volatility. Janet Yellen said that the Fed will hike three times this year and that is much more aggressive than expected. The S&P 500 has broken out of its range and we will see some nice rallies and a few dips. I mentioned in my comments last week that the drift lower last week was meaningless. It came on light volume and "window dressing" played a role. The S&P 500 is up 16 points before the open and most of the losses will be erased. Horizontal resistance is at SPY $225 and I would like to see us close above that level. The ideal set up would have been a decline to the breakout at SPY $221. A retest would be perfectly normal and a bounce off of that level would've provided an excellent entry point for long positions. We might still see that. ISM services, ISM manufacturing, ADP and the Unemployment Report will be released this week. Economic activity has gradually been ticking higher. Now that the Fed plans to hike three times this year, we need strong economic data (good news is good news). If we don't get it, the market will wonder if conditions are robust enough to shoulder higher interest rates. I am seeing decent global growth and I believe the first two months will be bullish this year. Be patient this week. I don't like buying into big gaps so I will sit out the first 30 minutes. Trading volumes will still be light as we nurse a holiday hangover. Look for a base to form around SPY $221 this week. A gradual grind higher off of that level would be very constructive. Tech stocks remain relatively weak and cyclicals are in favor. Keep your powder dry today and get ready for the action as the week unfolds. Buy dips. Support is at SPY $221 and resistance is at $225. Use those levels as your guide. . .

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