Gapping, to new record highs.  Bulls are large in charge.

With the market gapping to new record highs we have applauded the Bulls.  An impressive performance that was certainly not expecting.  Now the bigger question has to be answered.  Can the hold the new highs or could this be a beautiful head fake?  Only time will tell, and I am only too happy to wait on the sideline for the answer.  If they do hold, I will be ready to buy with both hands after the long weekend.  I may regret waiting, but I will have a worry free 3-day weekend.  What will you choose?

On the Calendar

Frist off the Economic Calendar docket this morning m is International Trade Goods at 8:30 AM Eastern.  The trade deficit has been getting slightly wider over the last couple reports but not so much to have caused much of problem in the overall economy.  Even so, we don’t want this to become a trend.  Also at 8:30 we get the latest reading on the Jobless Claims which has been pointing to a growing demand for workers.  A low number shows a strengthing economy but can also suggest that inflation it on the rise providing cover to the FOMC for more rate increases.  I know it’s a bug surprise, but there will also be a couple of Fed speakers today!

On the Earnings Calendar, we have 72 companies reporting today.  Rental reports are heavy on the list today with ANF, BBY, BURL, COST, DECK, DLTR just to name a few.  This sector has seen some significant challenges this quarter so let’s hope these companies report strong results.

Action Plan

Futures are pointing to big gap up this morning allowing not only the Q’s to make new record highs but also the SPY.  The DIA and the IWM lag behind but should also show a very strong open today.   A perfect V-formation is very rare in the market, but that is what we see right now in the charts.  I can point to nothing other than the possible increase in inflation to explain this rally.  All the uncertainty that created the selloff still exists.  However, it is not our job to understand the why?  Leave that to the talking heads.  As traders, our job is to follow!

Unfortunately, this breakout is occurring directly ahead of a 3-day weekend.  Because of that, my plan remains the same.  I will not chase this move into a long weekend.  I will continue to collect my gains as per my rules and manage the trades I continue to hold.  I will be flush with cash next Tuesday and ready to buy if the market can hold this new level.

Trade Wisely,

Doug