Market Will Challenge SPY $205 Next Week – Bid Will Be Strong Into GOOG and AMZN

October 16, 2015
Author: Peter Stolcers, Founder of OneOption

Posted 12:30 PM ET - Yesterday, the market opened on a positive note and it was able to hold support at SPY $200. Bullish speculators were flushed out and buyers stepped in. Once the momentum gained traction we closed above $202. We are likely to grind higher next week and SPY $205 is the next target. China will post IP/retail sales/GDP this weekend and the results will impact trading Monday morning. These releases should be better than feared and I'm expecting a nice open Monday. Google and Amazon will post next Thursday and Asset Managers will want to buy ahead of mega-cap tech stock releases. With Boehner as Speaker of the House, the debt ceiling will be raised. Fragile domestic economic conditions will keep the Fed sidelined during the FOMC meeting on October 28th. Earnings season is the only thing that can breathe life into this market. Results should be decent. I am not looking for a runaway rally. As we get above SPY $205, the headwinds will blow. We know that many industrials will be hurting from a global economic slowdown and from a strong dollar. Retail and restaurant could be weak due to over-saturation and minimum wage hikes. I plan to ride this next wave higher and I will set targets along the way. I bought in the money calls yesterday and I will hold them over the weekend. Option expiration has been relatively dull today. Look for choppy price action with a slight upward bias. I would like to see late day strength. Get long and ride this move higher next week. Lighten up on long positions if we close below SPY $202 and use SPY $200 as a hard stop. . . image

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