Posted by Pete Stolcers on July 18
Posted 9:30 AM ET – Yesterday the market took a breather after making a new all-time high Friday. Any dip will present a buying opportunity.
The healthcare bill is dead in the water and McConnell pulled it last night. This comes as no surprise and the margin of victory would’ve been razor thin even if it went to vote. Politicians won’t get anything done before recess and Trump is waist deep in “the swamp”. When DC goes on vacation investors get nervous. This is very typical for August.
The Fed will release its statement a week from tomorrow. Most analysts believe that they will reduce their balance sheet but the next rate hike is not expected until December. The rhetoric should be consistent with that outlook. We could see nervous trading next week, but the price action should still be good this week.
Earnings season will start to crank up. Netflix posted strong numbers yesterday and the stock is up 10%. Big banks will post earnings this week and they need to tread water if the market is going to advance.
The economic data is relatively insignificant the next two weeks. China’s trade numbers were strong last week and their GDP, industrial production and retail sales numbers were better-than-expected yesterday. Basic material stocks will have a good bid. Oil and precious metals are trading higher this morning.
Swing traders should be long QQQ calls. Place your stop at $141.50 on a closing basis. Your bullish put spreads should be making money and time decay is working in your favor. As long as the stock maintains technical support levels keep the trade on. If support is breached, buy back the spread.
Day traders will have an opportunity to buy a dip this morning. Let the market come in and wait for support. SPY $244.50 would be a nice entry point if we get that low. Earnings season will attract buyers. The volume has been light so set passive targets.
The overnight news regarding the healthcare bill has sparked a small round of profit-taking. No one really expected it to pass so this is just an opportunity to check the strength of the bid. Wait for support and get long. If the market is above the first hour high you can get a little more aggressive with your longs. Resistance is at the high from yesterday (SPY $246).
I will not be publishing market comments Wednesday.
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