Greed

The Bulls continue to dominate, and thus far earnings reports are supporting their efforts.  There is a saying here in farming country, “There is nothing like rising prices to break farmers.”  When corn prices are running higher farmers will buy and develop more cropland.  Heavily invest in more equipment to get the job done and plant every square inch of ground they can find with corn.  As a result, corn supplies soar, and prices per bushel begin to fall like a rock.  That’s the effect of greed.

As traders, it’s very important to guard against greed.  When the market is bullish trade it long, but take caution not to over-trade.  A Bull market is fantastic, but complacency will destroy an account.  Hold fast to your rules and maintain your discipline.   It’s also very important to take profits along the way.  Give us a dollar, and we want two.  That’s human nature.  Any business requires consistent profits to prosper, and trading is a business like any other.  Never allow greed to prevent you from taking a profit.  One day tide will go out, and profits will quickly evaporate.

On the Calendar

There is not much on Friday’s Economic Calendar, but it kicks off at 8:30 AM Eastern with the very important GDP.  The 3^rd quarter GDP is expected to slow to a 2.5% annualized rate from 3.1% last quarter.  The decline is a reflection of the major hurricane impacts on the economy.  Consumer Spending is also expected to decline to 2.3% vs. 3.3% last quarter.  Forecasters believe business investment may have softened slightly while vehicle sales moved higher.  The GDP price index could rise as to 1.6% overall vs. the 1.0 reading in the second-quarter.  At 10:00 AM Consumer Sentiment is expected to remain very strong at 101.0 on this reading.

The Earnings Calendar is showing about 130 companies reporting today.  Make sure you are checking reporting dates as part of your daily trading preparation.

Action Plan

Big tech knocked the cover off the ball with the after the bell reports.  Futures are once again pointing to a gap up open as GOOG and MSFT gap to new record highs.  Everything seems to be coming up roses for the market but do not forget the weekend ahead and the possibility of profit taking into strength.  Next week is even bigger than this on the earnings calendar so keep in mind anything is possible.  Keep that in mind as you plan for the weekend and the week ahead.

Trade Wisely,

Doug