Market Will Challenge the All-time High This Week – Stay Long

Posted 9:30 AM ET - I'll keep this short and sweet. I believe the market is going to challenge the all-time high this week. The initial reaction to Trump's victory was negative and the Dow staged a 1000 point reversal from the overnight low. Stocks continue to grind higher and they have been able to hold the gains. This move reminds me of Brexit. Initially stocks sold off hard and they quickly found support. Within a matter days the S&P 500 slingshotted to a new all-time high. Trump’s policies lower corporate taxes and that is good for earnings. Reduced business regulations will also help profits. In his 60 minutes interview last night he was presidential and that will calm nerves. A December rate hike is already priced into the market. More than three quarters of analysts believe that the Fed will act. If Donald Trump sparked a massive round of selling, the Fed would have held off. That is no longer a concern and the December FOMC won't be feared with the market at a new all-time high. China's industrial production and retail sales were good. We saw a rotation out of tech and into cyclicals last week. Defense, financials, basic materials and HMOs all seem a little stretched. I believe we will see those stocks stall and tech will start to rebound. I don't believe that we will see a big market pullback this morning. There is nice support at SPY $215.50 and I will lean on that. Major overhead resistance means that gains will be hard-fought. Wait for a small pullback this morning and look for stocks with relative strength. Once the market finds support, start scaling into longs. If the market closes at the high of the day, consider caring some overnight longs. If the market makes a new low after the first hour of trading, hold off on your longs and wait for support at $215.50. Once that holds, start buying strong stocks. I would discourage anyone from shorting this market. Seasonal strength and a bullish backdrop will push the market higher. . .

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