Bullish Follow-through is vital.

With the surprising strong move yesterday that it is vital we see some bullish follow-through price action today.  There is no question the market as of late has proved it is capable of producing big whips in price, but the ability to follow-through is an important element the market has lacked the energy to do.  Will today be different?  Only time will tell.  Another big question to ponder is how much risk are you willing to take with holiday trading likely to begin tomorrow.  As for me I plan to trade smaller than normal positions and will take profits quickly if I do decide to step onto the playing field.

On the Calendar

Thursday begins with a significant number on the Economic Calendar.  At 8:30 AM Eastern we get a reading on the 1^st quarter GDP.  If there is one number this week with the power to make a break the market, it would be the GDP number.  Forecasters expect the number to come in unchanged at 2.2%.  The question is can the market support these record high prices if the GDP continues show par growth in the economy?   Also at 8:30 we will get the Weekly Jobless Claims which are at historic lows and consensus suggests this week’s reading will not change this bullish number.

Other than that, we have a Fed speaker at 1:00 PM and several non-market moving events to round out the day.   On the Earnings Calendar, we have 35 companies reporting today such as AOBC, RAD, NKE, MU and CAG just to name a few members should be aware of as they plan the day.

Action Plan

Yesterday was a surprising whip back up on the back of easy money policy in Europe.  The VIX is once again testing historical lows and raising the concern of complacency.  The SPY is now right back in the narrow range chop zone where it has proved to be very difficult to trade due to the multiple reversal signals it has produced.  The DIA and the IWM are looking strong yet still closed under high resistance.  The QQQ’s had an impressive day holding support, but the overall the index remains in a downtrend and price is still below resistance.

As you plan the day keep in mind end of quarter window dressing could still be in play.  We must also consider the 4^th of July holiday on Tuesday and the effect that will likely have on volume moving forward.  I would expect Friday and Monday to very light and choppy trading days so plan your risk accordingly.  Friday and Monday I have decided that I will be taking off to enjoy my family during the holiday.  Of course, I will continue to write the morning note and produce a morning video but other than that plan to be gone.  Consequently, the RWO session for Friday and Monday has been canceled.  With the market closed on Tuesday well will get back to work with regular schedules on Wednesday morning.

Trade Wisely,

Doug