Buy This Market Bounce – Lots Of Good News Will Attract Buyers
Posted by Pete Stolcers on August 16
Posted 9:30 AM ET – The market is searching for direction and opposing forces will keep it in a tight trading range through Labor Day. Traders are selling at SPY $286 and buying at SPY $280 The news is light and traders/politicians are taking time off.
The problem du jour yesterday was Turkey. US economic sanctions are creating a potential credit crisis and Turkey’s currency is dropped 30% in the last week. This can be quickly resolved if Turkey releases a wrongfully imprisoned American.
The catalyst today is that trade talks with China will resume later this month. In early trading the S&P 500 futures are up 15 points.
Trade negotiations are taking place with the EU and with Mexico. This is bullish and deals could happen early in September.
Economic growth is strong and inflation is moderate. A September rate hike is “baked in” and tightening will not be an issue given the current backdrop. Retail sales increased a robust .5% (.6% ex-energy) last month. That will bode well for retailers and many are posting results this week. Walmart’s stock is up 11% before the open. Online sales increased 40% and same store sales were up a robust 4.5%..
As I mentioned yesterday, Trump will not risk a market decline heading into the November elections. Republicans need to maintain control of the House and Senate. The polls are tight and he will soften his tone. That means a government shutdown is unlikely and it means that we can expect trade deals.
Swing traders are long a half position of SPY. We missed adding the other half by $.16 yesterday. Keep trying to buy the other half at SPY $280. Be prepared to ride out a few squalls. The macro backdrop is bullish and the market is poised to breakout this fall. Stock valuations are very reasonable at a forward P/E of 16.
Day traders should buy early today. Banks and energy are trading higher before the open and good news from Cisco and Walmart will attract buyers. Any dip should be brief this morning. Technical support at SPY $280 and QQQ $178 was tested and the market jumped off of those levels in the last hour of trading yesterday.
Look for choppy conditions through Labor Day. Some of the dark clouds will part and buyers are waiting in the wings.
Market commentary provided by OneOption, LLC a firm separate from and not affiliated with Regal Securities L.P. Regal Securities L.P. has not participated in the creation of the content, and does not explicitly or implicitly endorse the content.