Yesterday we “bought the open”. Stocks probed for support early and we took a little heat. Buyers stepped up and the S&P 500 finished 30 points above our entry price. We will see follow-through buying the rest of this holiday shortened week and I believe we will challenge the 100-day moving average.

Trump is negotiating trade deals with China and a trade war will be avoided. South Korea already signed a trade agreement and the threat of steel tariffs brought them to the table. Without the threat of tariffs you have no leverage and without leverage you have nothing to negotiate. As I said my comments during the last few weeks, tariff threats were a ploy.

The Fed is dovish for the rest of the year (two rate hikes) and that is all I really care about. Conditions can change and their hawkish stance for 2019 could change. The Fed expects inflation to moderate in the next few months and that will give them breathing room.

Economic releases have been very strong and we don’t have any major announcements this week.

Earnings season is only a few weeks away and buyers like to load up before the cycle. This means the bid will be strong.

Swing traders should be long and our entry price was excellent. I expect to see follow-through buying the rest of the week. Use the 200-day moving average (SPY $258.35) as your stop on an intraday basis. I don’t expect to see that level for at least a month. We bounced off of that support and we have another capitulation low. My market bias has shifted from bullish to neutral on a longer-term basis.

Day traders should look for opportunities to get long early in the day. Support will be tested and stocks will rally when it holds. I’m expecting a grind higher today.

Stay long.