Market Reversal On Thursday Will Keep Buyers Engaged Today

Posted 9:30 AM - Yesterday the market fell below the 100-day moving average and the S&P 500 was down more than 22 points. Once the low of the day was established, buyers stepped in and stocks almost made it back into positive territory. Intraday reversals like the one we saw Thursday have a tendency to follow through the next morning and we are seeing a pre-open rally today. I was not overly bearish yesterday and I tried to make that known in my comments. We traded from the short side early and we took profits. Once the lows were in we played the bounce. Earnings season has started and that should keep buyers engaged. We are back in the range and I am expecting a steady grind higher today. Don't look for an explosive move. Up opens are difficult to trade. Be patient this morning. I believe the early rally will stall and we might even see a small dip early. Wait for that entry point and search for relative strength during the first hour of trading. After that we should drift higher. The action will slow down after the morning session and I don't plan on trading this afternoon. We are back in “wait and see” mode. Traders will look towards the next news event in hopes that the market can breakout of this range. Thankfully earnings releases will provide some action in this dull market. Swing traders can sell out of the money bullish put spreads. Make sure you have technical support between the short strike price and the stock price. If that technical support is breached, buy back the put spread. I also suggest buying back the put spread if the SPY closes below the 100-day moving average. From a day trading standpoint, we are finding good trades on both sides. Thursday was a banner day and it was fun to finally get some movement. Trade from the long side today and be patient. The action will slow down after a couple of hours and your entry will be the key to making money today. . .

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