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.