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Rally Remains Healthy in these Slow Days

Take profits during any market surge


Current Long Positions (stop-losses in parentheses): AIT ($31.83), NTRI ($21.22), MENT ($12.01), AMZN ($177.15), F ($16.33), CERN ($93.98), OI ($29.67)

Current Short Positions (stop-losses in parentheses): None

Bias: 43% Long

Economic Reports Due Out (Times are EST): ICSC-Goldman Store Sales (7:45 a.m.), Redbook (8:55a.m.), S&P Case-Shiller HPI (9 a.m.), Consumer Confidence (10 a.m.), State Street Investor Confidence Index (10 a.m.)

My Observations and What to Expect

* Futures are up slightly.

* A number of economic reports due out today, but nothing that I’d consider “market-movers.”

* Asian markets are mixed, while European markets are showing a slight bit of strength.

* Volume was extremely light yesterday, and will continue to be so throughout this week.

* As mentioned in yesterday’s trading plan, yesterday’s gap down was filled, and any other gap downs we see this week will likely be met with the same fate.

* China’s surprise rate hike had little impact on the markets yesterday.

* Yesterday represented the second day of consolidation at the recent highs of this market.

* Any kind of surge in the market, where we rally, say 10 points or more on the S&P 500 Index, will be a good opportunity to take profits off the table.

* Rally continues to be very healthy, backed by dip buyers, with a steady upward expansion.

* There is about 10 points of give back on the S&P from where it currently sits, and where the nearest level of support lies at 1247. Any sell-off within those parameters keeps the markets and the short-term uptrend intact without question.

* Breaking support at 1247, and the 10-day moving average, could usher in short-term weakness in the market.

* The dollar is once again looking a bit top-heavy and poised to move lower in the short-term, which should strengthen this market rally.

* The lows from Dec. 15 and 16 represent, in my opinion, the “higher-lows” in this recent market rally, and a break below them at 1232, would significantly stall this market’s upward progression and potentially invite a new trend to the downside.

* Below 1227, should we break it, the key support level for the S&P would become 1216 — the lows of previous consolidation.

* For the bears — use the seasonally light volume to push markets lower, with the first target being 1247.

* For the bulls – break the highs from last Wednesday, and out of the two-day consolidation.

Actions I Will Be Taking

* May add new positions to the portfolio, particularly Eastman Chemical Co. (NYSE: EMN), which I will be watching at $83.04.

* Increased the stop-losses in Applied Industrial Technologies (NYSE: AIT), NutriSystem Inc. (NASDAQ: NTRI), and Mentor Graphics Corp. (NASDAQ: MENT).

* Added Cerner Corp. (NASDAQ: CERN) at $95.67 and Owens-Illinois Inc. (NYSE: OI) at the close at $30.87 yesterday.

* Stocks in my portfolio that are on my “chop-block” should their weakness continue are (NASDAQ: AMZN), NTRI, and Ford (NYSE: F).

* Follow me in the SharePlanner Chat-Room today for all my live trades and ideas.

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