Like I Said – Stay Long – This Market Rally Has A Long Way To Go
POSTED BY PETE STOLCERS ON FEBRUARY 15
Yesterday the market gave us a big “tell”. The appetite for stocks is strong and a hot CPI did not deter buyers. The S&P 500 briefly tested the 100-day moving average and it shot higher. That massive 60 point reversal paved the way for a higher open and the futures are up 11 points (pre-open). When the market moves higher against bearish news it is a very bullish sign. This bounce has a long way to go, enjoy the ride.
The CPI was .1% higher than expected. Oil prices have been down and that is the largest component of CPI. Two weeks ago the Fed said that it would not accelerate tightening just because the 2% inflation target was hit. Powell is the new chairman and he wants a smooth transition. That means we can expect dovish comments. The PPI was in line with estimates (.4%) this morning and the market inched higher on the news (pre-open).
Bonds sold off yesterday (higher yields) and the market rallied in the face of this move. This is another “tell”. A week ago analysts were clamoring that higher yields were going to end the bull market. This is nonsense. Interest rates are near historic lows and they have a long way to go before they impede economic growth. Asset Managers did not care about the CPI or bond rally yesterday.
Economic growth is strong.
Earnings are fantastic. AMAT and CSCO posted great results. S&P 500 valuations are reasonable given profit growth projections of 17% this year.
Swing traders need to enjoy the ride. We bought at the 200-day moving average and we are well above the 100-day moving average. In a few days we will raise our stop to that level. The momentum should remain strong the rest of the week but it will start to wind down as we get closer to SPY $275.
Day traders should constantly be looking for opportunities to buy dips. Find stocks with relative strength.
The monthly option expiration cycle could “goose” the move higher the next two days.
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