Bullish Bias For the Next Week. SPY Should Be Able To Reach $217

Posted 9:30 AM ET - Yesterday the market fell back below the 100-day moving average and the price action all day was fairly weak. We are getting a nice bounce this morning and buyers should stay engaged ahead of Amazon and Google earnings after the close. Beats have exceeded misses by a wide margin and I'm still expecting a small rally into the middle of the range (SPY $217). Up opens are a little more difficult to trade since I've been favoring the long side. All ships rise with the tide and it is more difficult to separate the fakes from the gems. I will wait for the market to pullback and then it will be easier to spot relative strength. I will gradually scale into those stocks and I will have an opportunity to make money when the market challenges the high the day. Prices are wound very tightly and we are only getting one decent move every day. It takes place in the first couple of hours and then the market quiets down. If you miss this move, you might as well not trade. The probability of success drops off dramatically after a few hours of trading. We have been able to find great trades each day. Yesterday we jumped on Vonage (VG) in the chat room early. The key is to set targets and to take profits as soon as the move stalls. By the end of the day that stock gave up much of its gains. If you look at a chart of the SPY can see that we have been in a very tight range since July. Sooner or later we will breakout and that will lead to a sustained move. Until then, we will chop back and forth. If the SPY closes above the 100-day MA carry a few overnight longs. I am expecting a choppy upward bias for the next week. . .

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