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The Breakout Will Be Tested
www.oneoption.com
This is triple witching and we can expect some volatility.
PRE-OPEN MARKET COMMENTS FRIDAY – The market broke out to a new all-time high after the Fed’s 50 basis point rate cut. The technicals and fundamentals are bullish at this stage. It is typical for breakouts to be tested and we are seeing a slight pullback this morning. We want support to be established early.
Given the large move yesterday, most of the triple witching adjustments have been made. I am expecting a fairly quiet day today. Watch for an early bid check and support. Search for stocks that are NOT giving back the gains from yesterday and that are clearly above recent resistance levels (now support). Relative strength and heavy volume are keys to watch for. When the market ticks lower and the stock ticks higher, you know that buyers are interested. These are the stocks to watch for.
Take the strong stocks from yesterday that are on your watchlists and set alerts on M5 for buy signals. The market is going to dip on the open and many stocks will trigger exits. When they regain their footing you will get those buy alerts. Then gauge the dip. If it was brief and shallow, you have a good entry for a long. Make sure the market has found support.
I would only have starter swing longs on. I need to see proof that the breakout is going to hold and that could take a few days.
Support is at $566 and resistance is at the all-time high.
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