This morning CPI was a little hot and initial jobless claims spiked.

PRE-OPEN MARKET COMMENTS THURSDAY – Since the FOMC breakout a few weeks ago, the market has been compressing near the all-time high. Asset Managers were not aggressive and there was some profit taking. We know this because the market was trapped in a tight range. It took time for buyers to “soak up” the supply of stock and yesterday the next leg higher began.

This is a tenuous rally and I am not expecting a massive melt-up. If buyers were aggressive they would have plowed in after the 50 basis point rate cut a few weeks ago. That didn’t happen. They would have plowed in when the strong jobs report was released last week, but they didn’t. VIX/VXX is elevated and that tells us that Asset Managers are buy portfolio protection (puts). They are expecting volatility. The market climbs a wall of worry and the move higher is going to be gradual and every move up will retrace (bid check).

Don’t chase, buy dips once support is established. Some days, the dips will not find support and you have to stay sidelined. Those deeper dips will set up a better entry point for longs and that is how you need to approach those periods mentally. “I wasn’t able to trade today, but this decent drop is going to set up an even better entry point for longs and I will make my money then.” I am expecting a gradual float higher for a few weeks.

This morning the CPI came in slightly higher than expected (.2% vs .1%n expected). Initial jobless claims spiked to 258K and that is the highest reading I can recall in many months. That could spook some buyers, but it is only one reading. A series of higher readings would spark employment concerns so keep an eye on this.

Earnings season will kick off tomorrow with the big banks. People have jobs so they are borrowing money and paying back loans. That is good for bank profits and I am expecting these stocks to hold current levels and they could advance slightly.

The election and the FOMC Statement are a few weeks away and I don’t believe Asset Managers are going to make any big allocation decisions. They will support the market, but they won’t chase. The volume will be light.

I like having starter swings on, but I would just be riding gains and managing the positions. I am not bullish enough to add to exposure given the backdrop.

From a day trading perspective, be patient and buy dips. Every one of those dips is going to feel like the market is going to roll over and every one of them will bounce. We are going to get a dip this morning. You saw some buying interest yesterday so you know that the bottom is not going to fall out. There are buyers. You also know that they are relatively passive so you do not have to predict the low of the day. Let support form and be patient. If the selling pressure is heavy early in the day, you might not be trading much. If the bid check is brief and shallow, you know buyers are fairly interested and you can start entering trades earlier in the day.

Support is at AVWAPQ and $574.70 (previous high). Resistance is at the high from yesterday.