Yesterday the market took a breather after a huge run on Friday. Light profit-taking did not take root and buyers surfaced towards the end of the day. The S&P 500 is up 10 points in early trading. Don’t trust these early gaps higher if you are a day trader. Many of them have reversed and you need to be patient. Swing traders should be long calls – sit back and enjoy the ride.

The next potential speed bump is more than a week away and this rally will continue. Most analysts are expecting a rate hike when the FOMC releases its statement a week from tomorrow. The market will shoulder this round of tightening and traders will try to determine if the Fed will hike three more times this year. I don’t believe they will.

Inflation could speed up the Fed’s timetable, but it won’t be a factor. Rising wages are the greatest catalyst for inflation and last week’s Unemployment Report showed that the spike in January was temporary. I believe it was caused by tax cut bonuses/raises. Wages only increased .1% in February.

Prices have remained stable as measured by CPI, PPI and PCE. Oil is the largest component in price inflation and it has been drifting lower.

Without pressure from wages or prices, inflation will not be a concern for the Fed. The 2% target was hit for the first time in a decade and Powell said that he is willing to let it tick higher.

Economic growth has been incredibly strong. ISM manufacturing and ISM services were solid last week.

Steel tariffs are not a big deal. Trump is using this as leverage to renegotiate tariffs being imposed on US goods sold abroad and exceptions have already been made.

North Korea has stopped missile launches and they want to meet with Trump. My heart goes out to the poor North Korean people because I am sure they are starving.

All of these developments are bullish for the market and the all-time high is within striking distance. I believe we will grind higher and pause before the FOMC statement.

Swing traders should be long calls. Use the 50-day moving average on the SPY as your stop on a closing basis.

Day traders need to be patient. Make sure the opening rally is going to hold. Most of these gaps higher have reversed early in the day. Once support has been established, look for opportunities to get long.