Posted by Pete Stolcers on July 31

Posted 9:20 AM ET – Last week the market made a new all-time high as mega cap tech stocks reported. We saw a reversal off of the high Thursday morning and bullish speculators were kept in check. Apple will report this week and we will get a heavy dose of economic releases.

Earnings season has climaxed, but this will still be a busy week. In general, top and bottom line growth has been excellent. Companies are lean and mean and profit margins are healthy. After this week the earnings excitement will wane.

The FOMC statement last week was fairly hawkish. For the time being investors are focused on profits and tightening will not be an issue until we get closer to the September meeting.

ISM manufacturing, ADP, ISM services and the jobs report will be released this week. In general the numbers should show moderate growth. China’s official PMI’s were a touch light, but in line with expectations.

After this week we will hit a quiet patch. The Fed is in recess until September and politicians will take time off. Earnings season will wind down and we won’t have any major economic releases. Traders typically take time off the first two weeks in August.

Swing traders should have exited call positions at a nice profit last week. The price action will be generally positive this week, but I urge you not to get cute with long positions. The upside potential is smaller than the downside risk. I suspect that a nice sustained pullback is only a few weeks away and you don’t want to have the rug pulled out from under you. Trading volume will decline and the price action will get very choppy. After this week we will enter a low probability environment.

Day traders will still have some decent opportunities this week. Apple reports after the close Tuesday and tech stocks should remain strong through that number. Gaps up are difficult to trade. Relative strength is harder to spot so I will lay low for the first hour today. There isn’t enough good news to fuel a rally to new all-time highs this morning so I am not worried about missing a big run. I will wait for a pullback or a compression this morning. Use the first hour range as your guide. Support is at SPY $246 and resistance is at SPY $248.

This could be a quiet day, but the action the rest of the week should be decent.
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