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Our indicators continue to give bullish readings this week and, because the first four trading days of the new month typically have a strong bullish bias, the market should continue to rally over the near term. The only exception is that some of the weakest performers of the year could see tax-loss selling as we get further into December.
Meanwhile, the GOP tax plan is seeing some progress. Senator John McCain said that he would support the current version of the bill, and that was one of the reasons why we saw a big run higher in the market on Friday. The measure ultimately did pass the Senate and now appears headed for a conference to reconcile it with the House bill.
I really think the regional banks are going to benefit from the increase we’re seeing in interest rates, in addition to the tax bill. These banks do pay a lot of taxes, so they’re a natural beneficiary of this tax reform effort. Plus, the looser regulatory environment is helpful for regional banks as well; it’s having a real impact. So, today I am recommending a bullish trade on Bancorpsouth Bank (NYSE: BXS):
Buy to open the BXS Jan (2018) 35 Calls (BXS180119C00035000).
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