Manage Profits On Call Positions – Market Still Has Room, But Getting Over-Heated

Posted 9:30 AM ET - Yesterday the market took a breather and the action was quiet. We should expect pauses after the market runs hot for a few days. Stocks are gapping higher this morning and you should be making great money on your call options. The news this week is benign and I don't see any speed bumps. China will post industrial production and retail sales tomorrow. The news should be in line with expectations. Earnings have been decent this week and that should continue next week. No one wants to short mega cap tech stocks ahead of earnings, especially when the market is making a new all-time high. Many Asset Managers are under allocated and they are playing catch-up. There is not much stock for sale and a small bid can push prices higher in this environment. I will use the same tactic for my day trades today. I will research stocks during the first 45 min. and I will identify relative strength. I need proof that this rally is going to hold. When the market retraces I will have an excellent entry point on stocks that want to push higher. There is a sweet spot about 45 minutes after the open and it lasts for about 90 minutes. This is my trading window and this is when I make 90% my money. The last few days I have not traded the afternoon session and I don't plan to trade it today unless we get a big reversal (unlikely). If by chance the market makes a new low after two hours of trading I will day trade from the short side. I need to see traction during the decline. We've reached the stage where the market could be getting a little overheated and caution is required. I would not add to call positions at this time. You either have them or you don't. We should still have some more upside this week, but I would lock-in some profits on your call positions if you have nice gains. It will be easier to manage the rest of your positions if you do this. Today I am expecting a nice pop on the open and a pretty decent retracement of 6 to 8 S&P points off of the high. That dip will provide me with an excellent buying opportunity. I just need to make sure that support has been established and that a reversal is not underway. Once I have that confidence, I will scoop up stocks with relative strength and I will ride them for about 90 minutes. Your call positions will do well today. Manage profits and set targets along the way. . .

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