The futures price action suggests the Bulls are back in town!

The pre-market futures price action seems to indicate that the Bulls got everything they wanted over the weekend.  The establishment candidates win in Europe removing much of the uncertainty of their path forward.  Also, our President has put a very ambitious plan for Congress this week.  Not only is he expecting the passage of the New Health Care plan but also his new Tax Plan as well as a budget extension.

The Bulls seem to like everything they hear and apparently want to party like it’s it 1999.  As I write this, the Dow Futures are pointing to a nearly 200-point gap up.  It would be easy to let our emotions run wild this morning but let’s not forget that Congress must get something done!  Passing just one of these important measures would be a big week for this Congress let alone three!  If they fail should we expect a similar Bearish response in the market?

As much as I love seeing resistance levels broken, I have to remember that a one day gap up move does not make a trend.  A pullback to test support is not only possible but likely.  It would not be out of the question to see a big intraday whipsaw to test support with emotions running this high.  Keep a very close eye on price action this morning for quick reversals.  The wise trader will maintain discipline and stick to their rules of engagement no matter how emotional the market may be.

On the Calendar

The Economic Calander starts with week with a whimper but will end with a roar.  Today we have no major reports just a couple Fed speakers pontificating on interest rates.  However, as we move the week progresses we have several market-moving stories with the GDP number front and center Friday morning.  The Earnings Calendar kicks into high gear this week with nearly 1200 companies reporting by Friday.  Today more than 100 report earnings, so it’s a good idea to check and recheck before entering new trades.

Action Plan

At 8:00 AM Central Time I am being interviewed on a local radio station.  I should be finished up by the time the market opens today, but I will likely miss the first 30 minutes of the day.  I’m not holding many positions and stops are in place, so nothing to worry about there.  Just as soon as I get back, I will dive into the charts to see what I can find.

Keep in mind; we could experience a lot of volatility this morning.  Sitting on your hands for the first 30 minutes to allow the wild price fluctuations subside would likely be a wise move today.  Eventually, the Market could wake up to the fact that Congress saying they will do something is a long way from them getting it done!  If they fail, I think we could see Bears regain control.  Buckle up it could be a rough week!

Trade Wisely,

Doug