Market Running Higher – Beware If You See This Pattern
POSTED BY PETE STOLCERS ON JANUARY 5
Posted 9:30 AM ET – This market has a full head of steam now that it has broken through the all-time high. We have seen strong follow-through all week and the S&P 500 is up eight points before the open. There is a speed bump ahead, but it won’t come into play for another week.
Economic data has been strong (ISM manufacturing and ADP). The Unemployment Report came in at 148,000 this morning. That is a little light, but it is not dampening spirits.
Earnings season will start next week and that will keep buyers engaged.
Asset Managers who were under allocated are playing catch-up. The market is giving politicians the benefit of the doubt. A government shutdown is inconceivable and stocks will march higher until it happens. Given the breakout, any decline related to the debt ceiling will only take us back to the breakout ($268.50). That level will be tested and we will be off to the races again once the “can” is kicked down the road.
Swing traders should be long calls. Raise your stop to SPY $270 on a closing basis. Keep moving your stop higher. As the first week in January goes, so goes the month. January sets the tone for the entire year and we could be in for another good one.
Day traders need to be a little more cautious. The market gapped higher yesterday and it sat for most of the day. Intraday opportunities are limited and the range after the opening move is compressed. I am concentrating on swing trading, but my explosion alerts in Day Chat have been providing excellent opportunities. I am watching for an opening rally that reverses immediately and then drips lower the first half hour. I will short that move when I see it. That price action will also mark a temporary top.
Stay long and watch for that early reversal.
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