Let’s sell all of our SPY calls this morning into the strength of the market reaction to the CPI report. A lot of this is short-covering, not really voluntary buying and investing.
That leaves us with 5% XLF Calls (Financials) and 10% XLE Calls (Energy). Stay on alert for my signals, recall that our initial SPY target was 4450.
I am anticipating the nominal 40-day cycle making its appearance soon. On that dip, I might be choosing a more economically sensitive index such as the Dow. The Democrats are pushing the $1 trillion infrastructure, along with another $3.5 trillion linked budget package. Where that money is directed will impact the indexes.
Also, there will be a Gap at the open, and Gap Rules will apply. Here are the four most common outcomes to a Gap higher:
Not easy to take some time off, is it? At least the market isn’t going down, that is typically what happens when I am on a plane.
Enjoy your Wednesday.
AF Thornton