Today’s Trading Plan: On A New Frontier

Technical Outlook:

• A day of rest for the market yesterday – Dow (DIA) and SPX finished flat, while small caps and tech pulled back a shade. 
• Futures looking at a significant gap up this morning following a well received JPM earnings report. 
• Considering price action yesterday, it wasn’t surprising that SPY volume dropped off some and was below recent averages.
• Nice bull flag pattern on SPX 30 minute chart. 
• Difficult place for the bears at this juncture. You can try to short the market and call a top, but there is no basis. There is no more range and the topping patterns from the past two years have been negated.
• If the bears were to change the tune of this market, they could start by breaking key support (previously range bounce resistance) at 2120. 
• SPX is in line to challenge 2200 in the coming days. 
• VIX index actually sank 3.8% yesterday snapping a two days winning streak. Breaking and closing below 13 will be a key move for VIX and the market as a whole. 
• At this point, and with the election ahead, I’d expect the market to keep rallying higher. At this point I don’t expect there to be a rate hike between now and the election. To do so would impact the market and thereby the election. I don’t think the Fed wants that. 
• There is a great deal of bullishness to this market right now despite the prevalent amount of worry. It has been over two years since the market has actually seen a legitimate rally and so it wouldn’t be surprising to see this market continue its current trend higher as shorts are forced to face the new reality of the market. 
• In the very near term, the market is getting stretched, so some profit taking could be in store, though I don’t expect it to be enough to drag prices significantly lower. 
• At this point, it can be said that the market is climbing the “Wall-of-Worry”.
• Market is assuming that rate hikes are pretty much off the table for all of 2016.