The Bulls maintain market control.

Another weekend passes without a major incident effecting the market.  The Senate takes up tax reform, and earnings session begins to heat up this week.  Both could provide significant price action as well as increased volatility.  The futures are pointing to a slightly higher open today, as the Bulls maintain market control.

The Yellen speech on Sunday seemed to raise the likelihood of an interest rate increase in December.  Normally that is seen as a bearish signal, but lets keep some perspective and realize that would only bring the rate up to 1.5%.  If the market can’t handle a 1.5% interest rate, we will have far bigger problems in the economy.

On the Calendar

We begin a new week on the the Economic Calendar with the Empire State Mfg. Survey at 8:30 AM Eastern.  New orders are at and 8-year highs while delivery delay are at record levels.  This one of the first signals that an economy may start overheating.  Forecasters see the October number coming in at 20.5 vs. 25.2 last month.  The Treasury Budget is a 2:00 PM today but not expected to move the market.  There is on Fed Speaker late this evening and other than that just a few bond auction to round out the calendar.

This week the Earnings Calendar begins to ramp up with potential market moving reports.  It’s every traders responsibility to check reporting dates of the stock you own or are thing about buying.  Failure to do so can result in a very painful lession.  There are 27 reports today with the most notable report coming from NFLX after the bell.  The first of the so called FANG stocks could certanially have an overall market effect.  Time to prepare for higher volitality.

Action Plan

The Bulls continue to show incredible resielence, and there seems to be no fear of profit taking or retracement at the moment.  It will be interesting to see how stocks respond as earnings report begin to roll out.  Will earnings support these price levels?  Analysts say yes with an 11% growth expected overall this year.  Only time will tell.

Earnings Session normally kicks up the volitality.  Large market gaps ups or gap down open become much more likely so plan your trades accordingly.  As of now, the overall market trend continues to be up so I will continue looking for long trades to move with the trend.  The VIX does give me a little pause with it showing so much complaicency which should keep us focused on price action for clues of change.  At times like this, it’s important to trade what you see in the chart.  It’s so easy to missout on nice moves if you get caught up in your own pearsonal bias of what you believe the market should or should not be doing.  Always remeember that the market can remain irrational much longer that you stay liquid trying to fight it.

Trade Wisely,

Doug