Market Should Grind Higher the Rest Of the Month – Set Targets – Slowly Take Profits

FREE TRIAL - FOLLOW OUR TRADES IN THE CHAT ROOM Posted 9:30 AM ET - Yesterday the market jumped higher and it stalled for much of the day. Day trading requires a great deal of patience in this environment. I did not see a decent opportunity until the afternoon session when the market dipped below the first hour low. It quickly rallied back above that support and the dip provided a good entry point for long positions. China's GDP, industrial production and retail sales came in better than expected. This news should provide a decent bid today. Although tragic, the terrorist attack in France won't have a lasting market impact. The chart of the S&P 500 reveals declining trading volume. There is not much stock for sale and many Asset Managers are under allocated. They are playing catch-up and even a small bid can push stocks higher in this environment. The Fed is dovish and job growth is soft enough to keep them sidelined. On average we have added 147,000 new jobs over the last three months. That is good enough to keep sluggish growth intact. I'm not expecting a rate hike in July and the next meeting is in September. Earnings season started this week and the results were pretty good. Major announcements will begin next week and we should see bullish price action the rest of the month. The caveat is that the market can't make any huge jumps. If it does, it will be vulnerable to profit-taking. I suggested buying calls earlier in the week. Those positions should be paying off nicely and it would be prudent to gradually take profits as the market grinds higher. I have held a few call positions overnight this week and the opening gaps higher have produced nice profits. I still prefer to day trade and that strategy is working. However, the best strategy this week has been to swing trade calls. The large overnight moves don't have any follow-through during the day so the only way to make a lot of money is to hold overnight. I still don't trust this rally completely and a few more days of bullish price action will get me there. Use any dip today as a buying opportunity. I prefer to buy stocks that have pulled back and that are rallying off of a base. They have room to the upside and they don't necessarily need a market tailwind to move higher. Stocks that are breaking out to a new 52-week high need help from the market to fuel the move. Stay long. . .

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