Bullish price action is very important today.

Yesterday the Bulls came out to play, but they left behind a price action gap that requires a defensive plan today.  The one day pop was fantastic with many of us banking some tasty profits yesterday.  However, if the Bulls fail to defend the gap, I fear the confidence felt by the market yesterday will quickly erode.  So get out your pom-poms and cheer for the Bulls.  If we see the index prices slip into the gap prepared for the possibility of a quick selloff to fill the gap.  Keep in mind that as good as yesterday was the SPY, QQQ’s and IWM are still under resistance levels that have proved to be difficult to breach.

On the Calendar

Thursdays Economic Calendar begins with the weekly Jobless Claims at 8:30 AM Eastern followed directly by the PPI numbers.  Labor demand remains strong, and the jobless numbers are expected to continue that trend with forecasters expecting a 246k print this week.  PPI, on the other hand, has remained rather soft coming in a 0.3% in May with consensus expecting only 0.2% in June.  A great number in regards to inflation but not so much for the Labor force wages that continue to be flat.  At 9:30 AM round two with Janet Yellen begins before the Banking Committee in Washington.  Whatever she said yesterday seemed to inspire the Bulls, so let’s hope sentiment remains the same today.

On the Earnings Calendar, we have 22 companies expected to report today.  Among them is Delta Airlines which I am curious to see because of the sharp rise we have seen in airline stocks this quarter. DAL reports before the bell today.

Action Plan

The Bulls came out to play yesterday and stuck by enthusiasm all day.  The SPY and the QQQ’s faired the best holding up well the entire day.  The Bears were at work on the IWM and the DIA as we headed into the close but all in all the Bulls held their ground pretty darn well.  Because we left a price gap behind it will be very important that the Bulls keep up their efforts following through today.  Currently, futures are pointing to a higher open, but we will need to see how buyers react after the open.  A pullback that fills the gap I believe would damage confidence in this rally reinforcing the resistance levels.  So get-R-done Bulls!

All of our RWO positions did well yesterday and taking a one day gain +20% gain on BABA was a nice bonus.  I wish we didn’t have to, but I think think it’s prudent to that we take profits in C today ahead of the Friday earnings.  This trade performed very well, but there is just not enough cushion in the profits to safely hold through the earnings report.  So, l will be taking the 20% gain in C today and suggest member do the same.

Trade Wisley,

Doug