Hello Dow Theory and Tax Reform

Dow transports at new 52 week highs with lots of momentum, SP500 at 52 week highs with lots of momentum. NASDAQ has long been at 52 week highs with lots of momentum, and the DOW industrials also, you guessed it, 52 week highs with lots of momentum. Oh and long awaited tax reform chugging along through the legislature. Things are lining up quite well for a big run up in stocks.

The golden headline of tax reform is a corporate tax rate 15-20% lower so naturally we should see a 10+% rally in the overall market if it passes. However looking over the tax plan there are many shortfalls for the low to middle class employed person that could cause a hickup, and further delay tax reform. However of course knowing the money in politics I think the rich and corporations will be able to lobby the Senate to pass the reform,albeit an imperfect one, and we will see this rally.

Obama became known for passing healthcare reform, albeit imperfect. So why not have an imperfect milestone be made under the next president in terms of tax reform. The vote on the bill is expected late today or tomorrow.

IF you are gunho like I am I recommend an out of the money option that is cheap and highly leveraged for a run up of 10 percent in the SP 500. If a bit more uneasy over the bill a straddle, much more expensive, would be a good idea to profit off of either a pass or fail on tax reform.