Market Will Rally – Final Push Higher This Week – Gradually Take Profits On Longs

July 25, 2016
Author: Peter Stolcers, Founder of OneOption

Posted 9:20 AM ET - The market has been able to hold the breakout, but last week it was not able to advance. Mega cap tech stocks are on deck and we should see the final push higher this week. The FOMC meeting on Wednesday will keep buyers engaged and a rate hike is not expected. Earnings season has been decent. Global monetary easing has pushed equities higher and some Asset Managers are playing catch-up. August is typically a weak month. Italian banks are laden with bad debt, Brazil is perilously close to a credit crisis and Russia is burning through reserves. Credit concerns could surface and fear of a September rate hike could weigh on emerging markets in August. Gradually scale out of your call positions and set targets. You should be out of 80% of your overnight long positions by the end of the week. My overnight longs have been minimal and I continue to focus on day trading. I'm able to find 4 to 5 good trades each day and I've been able to consistently make money even though the market has been flat. Trading volumes have been low and patience is required. I like buying stocks that have recently pulled back and that are rallying off of a base. They have plenty of upside and they don't necessarily need help from the market. I wait for these stocks to compress during the day and when they break through that compression I enter. My targets are fairly passive since there isn't any market tailwind to fuel the move. I have not been trading the afternoon sessions. Even in normal markets I make 90% of my money in the first three hours of trading. My sweet spot starts 30 minutes after the open and it lasts for about 90 minutes. The market will be pretty quiet ahead of the FOMC statement. They will not raise rates, but they could mention stabilizing labor conditions (slightly bearish). After the FOMC we should see some market movement. Until then, focus on earnings plays. I like stocks that gap up through major horizontal resistance. If they make a big move, I have to wait for a pullback and a compression. When the stock starts coming out of that compression I get long. Earnings season is in high gear this week and there will be many opportunities. Look for generally bullish price action this week and make sure to take some profits on your overnight longs. . . image

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