Market Likes Trump – My Bias Is Turning Bullish – 1 Good Day From New High

November 10, 2016
Author: Peter Stolcers, Founder of OneOption

Posted 9:30 AM ET - This is not the reaction I expected and it's not the reaction analysts expected. The market is getting use to the idea of President Trump and the bid is firm. We are within striking distance of the all-time high and seasonal strength could push us through. In June we saw the reaction to Brexit. The market plunged and it quickly reversed. Within a matter of weeks we were making a new all-time high and the move defied logic. Trump's victory and the market reaction are very similar. A week ago Republicans were running for cover. It looked like Hillary would win the election and the GOP feared that they might lose the House and the Senate. Now they control all three and they are scrambling to lay the framework for Trump. Obamacare (at least parts of it) will be repealed, business regulations (.Dodd-Frank first) will be repealed and tax rates will be cut. The market likes the news and my bias is turning bullish. SPY $217 was resistance and we will rally above it today. I will use that level as my guide. As long as we are above it, I will trade from the long side. Yesterday I tried the short side early but support held. The SPY challenged the 100-day MA and it barely pulled back. When I saw the bid firm up I knew that we were going higher. We bought stocks when the SPY went through the 100-day MA and it was an excellent day. The buying continued right into the close. From the overnight lows until the close yesterday the Dow had a 1000 point reversal. We can't ignore that move and it is bullish. The trading action has been brisk and this tight compression will be resolved one way or the other. Once we breakout the move will be sustained. The Fed will raise rates in December, but that increase will be absorbed easily if economic growth improves. Even the notion that growth will improve can push the market to new highs. Look for opportunities to trade from the long side and use $217 as your guide. Firm support is at the 100-day moving average. . . image

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