Bulls are gathering energy for next week!

 

Market Trading Update (by L Roberts)

In yesterday’s note, we discussed the dollar’s impact on international and emerging market investments and why investors should consider taking some profits. Today, the next opportunity may be a rotation back into U.S. stocks, particularly following the Federal Reserve’s more “dovish” stance. The reduction in Quantitative Tightening and additional rate cuts is a reversal toward monetary accommodation. That reversal, while minor, was a tailwind for stocks on Wednesday and Thursday, but even more notable was the rally in the bond market as the Fed returned to being a potential buyer. That support gave buyers a reason to return to the market.

As noted previously, the market has been on a vital momentum “sell signal” since late February. Since then, the decline has worked off the previous overbought conditions, and now we are closing in on a reversal of that “risk off” period. As shown, the market’s momentum is improving and close to triggering a “buy signal,” with relative strength improving as well. Furthermore, the market completed a very normal 23.6% retracements of the rally from last year’s lows. The market needs to conquer resistance at the 200-DMA, but with recent improvement, a break above that resistance should trigger a round of “short-covering,” pushing asset prices higher. If that occurs, retail and professional investors will likely start chasing the rally, providing further support for the rally back to the 50-DMA.

Here is my pre-market note today. Although SPX is far from challenging the 5700 level today, considering it was under drastic selling pressure most of the day (about -60+ points at its worst down to test 5600), the last minute buying to push it up above the water at closing is a reflection of the strength of the bulls. I think chance is high to see 5700 being taken and surpassed early next week!

By the way, TSLA has a great week, especially today when the overall market was not doing that great.  Near term, I think it is heading to $300, probably within the next 2-3 weeks. If you haven't seen yet, here is why:

• Tesla: On the way to $1000 

• Here is my short-term trade with TSLA by selling puts:
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