Yellen Remarks Push The Market To A New 2016 High – Use SPY $205 As A Guide

Posted 9:45 AM ET - Yesterday the market rallied on dovish comments from Janet Yellen. The SPY rallied to resistance at $205 with ease and we made a new high for 2016. This morning, we are seeing follow-through buying. I don't trust opening gaps and I normally like to fade them. In this case, I won't. Mega cap tech stocks caught a bid yesterday and this is the rotation I've been waiting for. They are the key to the next leg of this rally. I will wait for a small dip early this morning and I will look for an opportunity to buy them. Google, Facebook, Apple and Bidu all look strong. As long as the market is above the first hour high, I will be comfortable trading from the long side. If prices falter and the SPY is trading below the first hour low, I will short cyclicals. ADP reported that 200,000 new jobs were created during the month of March in the private sector. This was a perfect number. A jobs report around 200K on Friday would also be market friendly. Earnings season will kick off in two weeks and that will keep buyers engaged. The higher we go, the closer we are to major overhead resistance. I am not going to stand in the way of this freight train, but an excellent shorting opportunity will present itself in the next month or two. Global economic conditions are soft. If you did not sell bullish put spreads, you missed your opportunity. Premiums are collapsing and you have to go too close to the money to get a decent credit at this stage. I will be day trading from the long side today. Focus on mega cap tech stocks that are breaking through horizontal resistance. The price action should be slightly bullish the rest of the week and volumes will pick up. Now that resistance at SPY $205 has been broken, we have a new support level to lean on. Use SPY $205 as your stop for long positions. I would not suggest buying calls. The upside is fairly limited and the gains will be hard fought. I am not sure you will have the tailwind you need and time decay will be a factor. . .

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