Posted by Pete Stolcers on July 13
Posted 9:30 AM ET – Yesterday the market staged an impressive rally and the S&P 500 closed above horizontal resistance levels (now support). Buyers are engaged ahead of earnings season and we should see positive price action for the next few weeks.
China’s trade numbers were strong and Monday they will post retail sales, industrial production and GDP.
Earnings season will kick into high gear in 10 days. We will hear from major banks (JPM, WFC and C) tomorrow. Netflix will post results Monday after the close. GOOG will post on Monday, FB on Wednesday and AAPL on 8/1. Mega cap tech stocks always attract buyers so we will see a strong bid into the first week of August.
On Wednesday July 26th the FOMC will release its statement. We know that they plan to reduce their balance sheet into September and most analysts feel that the next rate hike will come in December. Janet Yellen’s testimony before Congress was benign and stocks rallied in the absence of hawkish comments. She will conclude her testimony today.
The news will start to crank up in the next few days and it will continue for two weeks. Trading volume should be good and the market has momentum off of the low from last week. Major moving averages were not even tested before support was established (bullish).
Swing traders should be long QQQ calls and you should have been selling out of the money bullish put spreads. Now it’s time to manage profits. Raise your stop on QQQ to $139 on a closing basis.
Day traders should look for opportunities to get long this morning. Wait to see if the market gives back some of the recent gains. Once support is established, get long. I would be more aggressive on this type of price action then I would if the market simply started to grind higher. We might not get much of a pullback so you have to be ready to buy if stocks start marching. Use the first hour range as your guide. If we are above it use that as your stop. The move higher has come early in the day and stocks stall after a couple of hours.
Oil is trading higher and financials are stable. This is a good backdrop for the market and I believe we will move higher today.
The news for the next few weeks will increase and it should be market friendly.
Stay long and manage profits.
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