Bulls continue to show strength.

Bulls continue to show strength.

After such an impressive run higher, the Bulls continue to show strength this morning.  The Dow futures are pointing to a new record high, and the VIX hovers near historic lows.  Is there really no fear in the market or are we looking at mass complacency?  Your guess is as good as mine.  It is logical to think a pullback could begin at any time after such a strong bullish move.  However, it’s a mistake to try an predict a top.

As I was coming up as a trader, this is a mistake that I would repeat over and over.  I would predict that the market was up so much it absolutely had to come back down.  Sadly that proved to be a very costly mistake for me.  At times I would stand aside anticipating a pullback only the watch the market continues moving higher and leaving behind.  I would often miss out on the biggest bull run of the year.  Even worse I would at times get short thinking the Bears had to take over soon only to be run over by the bulls.

When we look at the charts, it’s logical to think a pullback is likely and we should prepare.  However, if we put our bias aside, we see a chart showing no evidence of a pullback as of now.  I am not suggesting we should throw caution to the wind and buy with both hands if fact I have been taking profits into the strength.  I am only trying to suggest that you see the chart as it is not as you believe it should be!  Emotion can easily trump logic making a run last much longer than anyone expects.

On the Calendar

About all that’s on the Economic Calendar is that today is Columbus Day.  As a result, banks and bond markets closed in observance of the national holiday.

On the Earnings Calendar, there are 14 companies reporting today, but I don’t see anything particularly noteworthy or market moving.

Action Plan

The DIA, SPY, IWM, and QQQ’s decided to a little rest on Friday morning, but the Bulls had another plan’s for the afternoon lifting them off the intraday lows.  The QQQ’s managed a new record high close by the end of trading on Friday following through after it’s impressive breakout Thursday.  As of now, the futures are suggesting a bullish open today with the Dow possibly opening today’s trading at yet another record high.  Friday saw the VIX rise slightly after having reached a new closing low Thursday.

With the banks closed today it’s possible we could see a choppy light day after the morning rush.  There are a lot of good-looking charts to choose from but make sure that you’re not chasing.  I want to continue to trade long with this very bullish trend however we should not be surprised to see profit taking begin at any time.  Plan accordingly.

Trade Wisely,

Doug