Market Within Striking Distance of the All-time High – Get Ready To Buy Puts

I will be hosting a Free Webinar Wednesday night and you will see new trades. CLICK HERE TO REGISTER Posted 9:45 AM ET - Yesterday, the market staged a huge rally in the first 30 minutes of trading and then it flat lined the rest of the day. Friday's losses were erased and we are within striking distance of the all-time high this morning. I relish this move and I am patiently waiting for signs of weakness. Mega cap tech stocks will start posting results (MSFT Thursday). Once Apple is out-of-the-way (4/27) I will be a little more confident shorting stocks. I want to see late day selling for a couple of days in a row. At this stage, I'm just evaluating earnings reactions. I am particularly interested in stocks that have posted big gains in the last month and that have announced earnings. If the stock was not able to rally on the news and if it has not been able to move higher in a strong market, it could be ready to reverse. The market has factored in that a rate hike won't happen until September (at earliest). This news should have propelled us to a new high and it did not. Economic conditions continue to deteriorate and traders are more worried about a tiny little quarter-point rate hike then they are an economic slow down. Q1 GDP will be released next week and it could come in below 1%. Stocks are trading at a rich forward P/E of 18 and earnings will decline for most sectors on a year-over-year basis. This will be the biggest percentage decline since 2011. I believe profit-taking will set in during the next few weeks. Industrials will start posting on Thursday and we could see some weakness. The market is at the upper end of its range and it lacks a catalyst. We're approaching seasonal weakness (Sell in May) and Greece needs to secure major loans in May. All of these negative influences are converging and I will get more bearish with each passing week. I mentioned in my comments yesterday that the market should move higher this week. I'm not stupid enough to short prematurely. I want to see the high tested and I want to see us back off quickly with selling late in the day. That will be the first sign of trouble and I will buy some puts. When technical support levels fail (SPY $209 and $206.50) I will add to my positions. Look for a gradual grind higher the next two days. Flash PMI's will be released Thursday morning along with industrials. That could be the first day we see a little weakness. If you are long, set targets and protect profits with stops. . .

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