The bulls are pushing the market higher as they march towards our upper-end resistance targets. While we admit we are rather surprised by the rally, we still don’t trust it.
Today’s rally is on hope the Federal Reserve will extend their “Operation Twist” program which involves buying and selling short and long-term bonds. The FOMC is expected to lower its forecast for real economic growth and raise its forecast for the unemployment rate so Wall Street is expecting some kind of stimulus package. Given the rally since last week, this news may already be factored into the market and if they don’t do anything we would expect a pullback.
The rest of the week will be interesting as jobless claims take center stage on Thursday before the bell. Initial Claims are creeping back towards 400,000 along with the 4-week average so the bulls will need a good report to keep this rally going.
We were able to close another winning trade for our Weekly Wrap as we are now 20-0 for the year. Last year, we were 19-0 which now brings our overall Track Record to 39-0 over the past 2 years for the publication. We also sold 3 more call options on a few of our other current positions which are on track to return us double-digit profits by mid-August.
We are still waiting for confirmation this rally will stick before going long with call options. We should get a good idea by week’s end on where the market could be headed for the rest of June and into July as the dust settles.
We have a lot to cover inside our Members Area so let’s get on it. We will be back in the morning with our next update.