The Market Bid Is Strengthening – Buy Stocks and Expect To Take A Little Heat

August 28, 2015
Author: Peter Stolcers, Founder of OneOption

TAKE THE 1 WEEK FREE TRIAL Posted 9:00 AM ET - Yesterday, the market was able to hang on to early gains. As the day wore on, the bid strengthened and we closed on the high of the day. I bought calls and I had nice gains in the positions. This morning, I will give those gains back. It won't faze me because I expected to take some heat along the way. This is a bottoming process and it could take a few more days. For the last four months we have been day trading to make money in a sideways market. We experienced a major decline and a capitulation low off of major support this week. The five-year bull market is still intact and we can shift to swing trading. This is like going from hand-to-hand combat to an aerial attack. We don't have to be precise, we just have to get the general direction right and we have to be persistent. I will be adding to positions this morning. I believe the decline this morning will soon find support and the market will rebound today. The overnight news was relatively bullish. China is not falling off of a cliff and they are doing everything they can to support their economy and market. That includes lowering interest rates, lowering bank reserve requirements, devaluing the Yuan and buying stocks. Their market rallied 5% overnight. The recent market declines will keep the Fed from raising interest rates in September. They claim that they don't care about market volatility, but they do. GDP rose 3.7% and domestic economic growth is stable. Bond yields have not spiked and I do not sense a flight to safety. Equities are the most attractive investment alternative and money will flow into the market. This is a fantastic buying opportunity and I encourage you to step up to the plate. Scale in and know that you will take some heat along the way. When the bid finally does return, stocks will quickly run higher. I am expecting a 3 to 4 day stretch a steady gains in the next couple of weeks. You don't know when those moves will occur so you need to be positioned ahead of time. Let the market find early support and sell puts and buy stocks. Option traders can sell puts and use the proceeds to buy calls. I believe the market will find support early this morning and it will grind higher the rest of the day. . . image

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