Posted by Pete Stolcers on July 17

Posted 9:00 AM ET – The market is performed well last week and it will start strong this morning. China’s economic numbers were better-than-expected and earnings announcements will increase this week. The S&P 500 made a new closing high and this breakout will have legs for a few more weeks.

China’s GDP came in at 6.9%, retail sales increased 11% and industrial production increased 7.6%. All of these numbers beat estimates and China’s steel output hit record levels in June. The PBOC is likely to tighten soon.

Banks posted solid numbers Friday and good news was priced in. They retreated slightly, but the damage should be contained. This week’s earnings will be dominated by financials. Netflix will post after the close today, but mega cap tech stocks are still a week away from announcing (Google next Monday).

Republicans are scrambling to get a healthcare bill passed before recess. The vote is very close and I doubt they will get it done. Nothing happens in DC during the summer. This will not be an issue for the next few weeks, but it will weigh on the market come September.

The Fed will meet a week from Wednesday. Most analysts are expecting them to reduce their balance sheet and to hike rates in December. The rhetoric should be consistent with that timetable. Investors always get nervous before an FOMC meeting. That gives us another seven trading days to ride this momentum.

Swing traders should be long QQQ calls. Raise your stop to $141.50 on a closing basis. Your bullish put spreads should also be making money. Place your stops below technical support and let time decay work its magic.

Day traders should be buying dips. The previous all-time high was $244.65 and you can use that as your stop. Give the market time to find its footing this morning and scale into long positions when it starts to grind higher. Good earnings announcements and strong numbers from China will fuel the move. There are not any news events that will cast a dark cloud so it’s all about momentum.

Look for a nice grind higher this week.
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