Buy Stocks and Day Trade Once the Early Selling Subsides – No Overnights

January 8, 2016
Author: Peter Stolcers, Founder of OneOption

Posted 10:00 AM ET - The market has been crushed this week and China is to blame. We're getting a nice bounce this morning on a strong jobs number (296K) but we are not out of the woods yet. The downside will be tested early this morning and support will be established quickly. Sentiment is extremely bearish and we should see a short squeeze today. Let the selling pressure run its course and line-up your longs. I expect to see a gradual grind higher throughout the day. I am only day trading. I don't want overnight risk exposure heading into the weekend. I am focusing on stocks that have been beaten down prior to 2016 and that have formed a strong base. During the market meltdown, they needed to tread water. Today I want to see a breakout through horizontal resistance. GNC is the type of stock I am looking for and my platform will deliver stocks with this pattern. It is also critical that my trading system has generated a buy signal on the stocks and I want heavy volume. If I have all of these ingredients, my probability of success is extremely high. Members in the chat room will be finding candidates and we will be posting our trades. I expect to see a nice move higher today and we could see a little follow-through Monday. However, I still expect to see some selling next week. Towards the end of next week, I expect the PBOC to take action. Central banks love to screw shorts and option expiration provides the perfect opportunity. Earnings season is a couple weeks away and the strongest companies announce early in the cycle. This will attract buyers. I don't know if the market will rebound into earnings season, but I am fairly certain that the bid will strengthen after next week. This should set up an excellent put selling opportunity. Day traders, get ready for a nice opportunity to get long today. Let the early wave of selling run its course. You can increase your size when the market rallies above the first hour high. After that we should grind higher the rest of the day. Swing traders, be patient. There is an old market adage, "The second mouse gets the cheese." I believe it is still too early to sell bullish put spreads. That will be your next trade and we should see a nice opportunity towards the end of next week. It's been a tough year for investors and we are only one week into 2016. It has been a great start for the chat room and we have been able to make nice profits day trading. image

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