Posted by Pete Stolcers on November 9

Posted 9:30 AM ET – The market has been trapped in a tight range during a seasonally bullish period and that is a warning sign. All of the good news you could possibly ask for last week was not enough to push stocks higher. As I mentioned in my comments yesterday I have been taking profits on my long positions. The price action this morning looks weak.

Retailers will start posting results and dismal brick-and-mortar results could put pressure on the market. Earnings season is “front end loaded” and that catalyst is gone.

Economic conditions are strong.

The Fed will hike rates in December. This is priced in, but the actual event could spark profit-taking.

Republicans need to unite if tax cuts are going to be approved by year-end. They won’t get any help from Democrats and the GOP needs every vote. The debt ceiling needs to be extended by year-end and that will be a distraction.

There isn’t any overnight news to justify the drop this morning. The market has struggled to advance and we are seeing a light round of profit-taking. Some bullish speculators will be flushed out.

Swing traders need to take profits on call positions. I stressed this in my comments yesterday and I have been exiting positions. The upside is very limited without a tax cut. It’s time to go to lock in gains and reduce risk. If we get a nice drop I plan to reload.

Day traders have an opportunity to get long today. Let the market come in and wait for support. Once it is established start buying S&P futures. Use the low of the day as your stop and make sure to exit the trade today. This strategy has worked well in the last two months. My day trading has been very limited because the intraday ranges are extremely compressed.

Don’t get spooked by this drop. Calmly exit positions and know that we are likely to bounce today. I plan to be out of all of my overnight calls today.

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