Ride These Calls – The Market Is Going To Grind Higher

Posted by Pete Stolcers on June 21
www.oneoption.com

The narrative has not changed much overnight. The market has been able to shoulder negative news and it wants to grind higher. Tech stocks and small caps are leading the charge. The NASDAQ 100 and Russell 2000 are making new highs.

Trade war rhetoric is escalating between China and the US. Daimler trimmed forecasts and cited Chinese tariffs on US cars as the reason. The market is down a little bit on the news, but buyers have been discounting potential trade wars.

We’ve been patiently waiting for clarity and we have it. The market has shouldered negative news and that is a bullish sign.

Higher interest rates will not impede economic growth. Inflation is moderate and yields are still low by historic standards.

Corporate profits are healthy and guidance is robust. Earnings season is a few weeks away. Micron posted an excellent number overnight. At a forward P/E of 16 the S&P 500 has room to run.

Swing traders should be long IWM calls per the instructions yesterday. Small cap businesses have less exposure to trade wars and they will benefit from strong domestic economic growth and tax cuts. Stay long and use IWM $168 as your stop on a closing basis. We will keep moving our stop higher as the index rallies.

Day traders should look for opportunities to get long. Focus on tech stocks that are unaffected by trade wars. If the SPY is above its first hour range you can get more aggressive with longs.

I’m expecting a grind higher for a few weeks.