The market is going to wait for major news during the next 10 days.

PRE-OPEN MARKET COMMENTS TUESDAY – I sense some frustration on the part of traders. The market has been volatile within a very wide range and many of you feel like you missed a great shorting opportunity yesterday. Don’t be hard on yourself.

1. The market was trading off of negative news that lacked substance. Trump mentioned firing the Fed Chairman, but there was no substance. It was all bluster.
2. Post holiday sessions do not typically generate big moves. Everyone was still trying to get their bearings after a long weekend.
3. European markets were closed so the market participation was low.
4. Gap and Go formations are do not present good risk/reward profiles.
5. An initial steep move lower (especially on a Gap and Go) typically produces a big bounce. That is a much better entry point for shorts. We never got the bounce.
6. This was a buyers boycott vs a heavy round of selling.

This morning the S&P 500 is gapping up and much of the losses have been erased.

There is major earnings news pending this week. The results for Q1 should be good and the economy is still clipping along. Guidance will be guarded because CEOs don’t know what the tariffs will be or how they will impact consumption. Next week major economic releases will posted (GDP and the Jobs Report). There is a chance that a trade deal could be announced and the Senate will try to approve the budget. Institutions are going to wait for this news and they are not going to place any large bets. That means we are going to stay trapped in the range from the April 9th bar.

There was some selling pressure yesterday and we have a big overnight gap up. I believe that the first move today will be a wimpy bid check. The majority of the overnight gap will be preserved and the market will find support in the first hour. I believe that will set up the first trade of the day and this scenario would favor the upside. If the first move is a wimpy rally that struggles to advance, the best set-up will be to fade it when it runs out of steam. Buyers and sellers are engaged, but neither side has overwhelming control and they are not likely to place major bets ahead of the news.

From a swing trading standpoint, I still like selling naked out of the money puts on strong stocks. High option IVs are creating a great opportunity to sell that expensive premium. Distance yourself from the action and generate income while we wait for clarity. These puts are 20% or more out of the money and this is really a neutral strategy. When day trading conditions are choppy like this you need to generate income from swing trades.

Support is yesterday’s close and resistance is yesterday’s high.