Just 30 min. of price action spoils the day.

The slight push higher yesterday lifted spirits of traders yesterday, and I can imagine many traders rushed in an attempt to pick a bottom.  Slowly they were rocked to sleep by the light volume back and forth afternoon choppy price action.  Then in the last thirty minutes of trading, the rug was pulled out from under them.  Unfortunately, this is the nature of price action around possible market highs.  The discipline to stand aside is tremendously difficult learn.  We want all days to be good trading days, but the fact of the matter is they are not.  Sometimes doing nothing is the very best trade one can make.

On the Calendar

On Friday’s Economic Calendar we have a two important number to watch.  First, at 9:45 AM Eastern we get the PMI Composite number which has been moving higher this year.  However, expectations for today it that we see PMI decline.  I doubt it will be a big market mover unless the number comes in sharply lower from May’s 52.7 reading.  Keep in mind anything above 50 is growth.  At 10:00 AM we get the New Home Sales Report which last month declined sharply.  Today consensus is suggesting an increase to 590K or better.  After that, we have three Fed Speakers needing to pontificate on interest rates.

We get a little rest in the Earnings Calendar today with only six companies reporting quarterly results.  BBRY which was on the list yesterday must have needed a little more time to finish their report because it moved to today before the bell.  I only bring that up because I know there are several members watching the stock.

Action Plan

After attempting a rally yesterday, the overall market whipped lower in the last 30 minutes of trading wiping out earlier gains. Only the IWM managed to hold on to a positive close.  The good news is that the DIA and SPY continued to support before the end of trading.  It is wise to remember just how quickly whipsaws can change the perception of the day in a short period.  All can appear positive, but minutes later that rosy fragrance suddenly smells like something that came out of the south end of a northbound cow.  Ugg!

Futures are currently suggesting a lower open that may bend price support to breaking points if traders start piling on at the open.  Of course, the opposite is also possible.  Opening lows could set up yet another engineered whipsaw attracting dip buyers.  Although the overall trends are still up, I will have to stand aside until I see evidence of buyers moving in before looking for new positions.  Friday is profit day so protect those gains by taking them to the bank.

Trade Wisely,

Doug