Market Support Will Form Ahead of Earnings Season – Use This As A Stop
POSTED BY PETE STOLCERS ON MARCH 29
The market is trying to find support at the 200-day MA and I expect to see a bounce heading into earnings season. There is nothing like profits to attract buyers and the results should be excellent. Stocks are trading at a forward P/E of 16.5. That is near the upper end of the range, but not in bubble territory.
Trump is negotiating trade deals behind closed doors and that is a positive sign. South Korea already came to the table and they made concessions.
The Fed plans to hike two more times this year and that is dovish. They expect inflation to moderate and a .1% wage inflation number would be market friendly when the jobs report is posted a week from tomorrow. Price inflation (CPI/PPI/PCE) has been tame and this gives the Fed breathing room.
We will see the market bid strengthened into earnings season. I believe the 100-day moving average could provide resistance, but we should be able to bounce to that level. Technology stocks have been weighing on the market and social media companies have been particularly weak. Once this bounce runs its course, we could see more selling in May.
Swing traders bought the open on Monday (SPY $264) and we are taking some heat. Maintain your position and use the 200-day moving average as your stop on a closing basis. With each passing day the likelihood of a bounce increases.
Day traders should look for opportunities to get long. Nervous action early in the day should give way to a grind higher. If the market is above the first hour high, increase your size. Major support (200-day MA) is just below current levels and I feel the downside is relatively contained.
Tomorrow is an exchange holiday. Take a break from this volatility and enjoy time with your family.
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