S&P 500 Will Make A New High Today – Stocks Will Float Higher Into Year End

Posted 9:40 AM ET - On Christmas Eve the Dow made a new all-time high and the S&P 500 is likely to do so today. Trading volumes are light and no one is going to stand in the way of this freight train. The economic news has been good and US GDP grew 5%. With the Fed remaining accommodative, investors have the green light. Money Managers like to finish the year on a high note and even a small bid can push stocks higher in this environment. In the last 10 years, the market has averaged a gain of 1.6% in the last week of trading. New Year's will bisect the trading week ahead and volumes will be concentrated around major economic releases (ISM manufacturing, ISM services, ADP, official PMI's and the Unemployment Report). The news should be market friendly. Low gasoline prices should be good for retailers. The debt ceiling has been extended and China is supporting the ruble. For the remainder of the year, soft economic conditions in Japan and Europe won't matter. China could be an issue, but no one will care during the next few days. I am short out of the money put credit spreads and I own some deep in the money calls that trade at parity (intrinsic value). Stay long and be small. If you are trading the SPY, raise your stop to $207. . .

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