The Bulls showed strength defending the rally.

At the market, I was concerned that the Bears were taking over, but the Bulls showed strength, stepping up and defending the rally.  The SPY and the QQQ’s displayed remarkable strength continuing to move up into the close.  Currently, the bull run is getting a little over baked with eight days up, however, if earnings reports continue to provide the market confidence that can continue.  If we stay objective setting aside personal biases and simply focus on price action, we can identify and follow the directional clues.  Follow don’t predict!

On the Calendar

The hump day Economic Calendar begins with Housing Starts at 8:30 AM.  Last week the housing starts and permits were noticeably weak last month coming in just over a 1 million annualized rate.  Forecasters are expecting a big rebound this month bringing the annualized number up to a rate of 1.170.  At 10:30 we have the EIA Petroleum Status Report that has become heavily watched by traders the last couple years.  Inventories have been falling for several months now, and we need that to continue to stabilize oil pricing.  If we happen to get an increase in supply, we can expect an overall negative reaction by the market.

On the Earnings Calendar, we have 81 companies reporting earnings today.  There are few companies that report before the bell, but the biggest reports will be after the close today with the likes of AXP and QCOM.  Stay on your toes as we ramp up and make sure you check when companies report or suffer the consequences.

Action Plan

After a quick morning plunge, the Bulls went back to work showing they want to defend support levels.  The DIA has the most dramatic move of the day leaving behind a Hammer pattern above price support.  Keep in mind a Hammer requires follow-through.  The SPY managed to squeak out yet another record closing high on its end of day bullish push while IWM remained under price resistance.  The continued strength in the QQQ’s was nice however the rally is nine days old, and a pullback or consolidation could begin at any time.

Futures are currently suggesting a slightly lower open, but there are still some big reports to come, so anything is possible.  We have some fantastic gains in our RWO trades, so the first order of business will be to manage these positions.  I will be looking for new positions today, but once again I will likely give the market 15 to 30 minutes focusing on the price action before making any decisions.

Trade Wisely,

Doug