Posted 9:30 AM ET – Last week the market started 2018 with a bang. The S&P 500 broke out and it rallied almost 60 points during the week. Strong follow-through and good volume suggests that we are going higher. The debt ceiling is the only speed bump and the deadline is approaching.

Economic releases have generally been good (ISM manufacturing, ADP and ISM services). The Unemployment Report last Friday was a little soft (149,000). The market shrugged the number off and it posted solid gains.

Earnings season will start this week, but the action won’t crank up for another 10 days. The results should be excellent. Kohls reported a 7% increase in year-over-year comps and that should be good for the retail sector.

Politicians are getting back to work and I haven’t heard much about the debt ceiling negotiations. That is not a particularly good sign. I sense an ugly battle.

The market does not like uncertainty. For now, it is giving politicians a free pass. It’s inconceivable to think that both parties would allow a government shutdown. The closer we get to the deadline without an extension, the more nervous the price action will get. Any decline will challenge the breakout. That is a support level now and it will represent an excellent entry point.

Swing traders should be long calls from last week. Ride the momentum and trail your stops higher. Support is at the breakout (SPY $268.50).

Day traders might have an opportunity to get long this morning. The price action is a little soft. Wait for support and buy when stocks start grinding higher. Intraday ranges have been very compressed and day trading opportunities are limited.

The debt ceiling is still two weeks away so we should see good price action this week. The nervousness won’t start until we are right on the deadline.