Market Wants To Grind Higher – We Might Not Get the Dip – Use the 100-Day MA As Your Guide

Posted 9:15 AM ET - The market started on a weak note and the S&P traded in negative territory the entire day. Stocks did find a bid and they clawed their way back Monday. Fortunately, the little boy in New York tested negative for Ebola. This disease is the primary dark cloud that hangs over the market. As long as it is contained, the market will rally. Japan posted stronger-than-expected retail sales (2.7%). Durable goods orders were weaker than expected. The FOMC will release its statement tomorrow. They will end the bond purchase program and I believe they will keep the phrase "considerable time" in their statement. They are worried about disinflation and they do not want to hit the market with a double whammy. If this plays out, the first time they can remove the phrase is in December and the market will like the news. China's economy is clipping along at 7.5%. Their industrial production, retail sales, GDP and flash PMI's were better-than-expected. Europe is weak and they are likely to slip into a recession. Germany's flash PMI came in better than expected last week and their economy is not falling off a cliff. Conditions are likely to deteriorate in coming months, but this won't prevent a year-end rally in the US. For the most part, earnings have been good. Twitter missed their number last night and high P/E stocks are vulnerable. Cummins posted a good number and they cited strength in North America, China and Europe. Heavy equipment stocks will benefit from the news. Gasoline prices continue to fall and that should stimulate spending. Most analysts believe that Republicans have a good chance of winning the Senate. We could see a small GOP rally ahead of the vote Tuesday. The jobs report will be posted a week from Friday and the results should be good. Initial jobless claims have been good the last three weeks and that bodes well for employment. Apart from Ebola, the table is set for a year-end rally. I have been selling put credit spreads and they are in great shape. I have also been day trading the S&P using the 1 hour range. That strategy has worked out as well. The SPY will open above the 100-day moving average today. Wait to see if the rally this morning holds. If we trade above the 100-day moving average and that support holds, look for opportunities to get long (put credit spreads or small call buying). . .

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