Follow-through is Required

The relief rally was just what the doctor ordered.  Trader everywhere got that familiar warm and fuzzy feeling that the Bulls are back in control.  While it’s true, the Bulls produced wonderful reversal patterns in the index charts let’s not forget Follow-through is Required.  One day does not make a trend!  Please understand I’m not suggesting bearishness of any kind.  I’m merely pointing out how important it is to see the price action as it is, not as we would like it to be.  The indexes are at or near all-time-highs which means resistance requires consideration in your planning.  Go Bulls!

On the Calendar

The Friday Economic Calendar kicks off at 8:30 AM with the potential market-moving Housing Starts report.  The September housing starts number fell sharply to 1.127 million.  Multi-family units were particularly weak while single-family units gain ground.  The October consensus expects a 1.190 million rate for starts with permits rising to 1.250 million.  After that, we have a couple of non-market-moving reports and a Fed Speakers at 12:45 PM.

On the Earnings Calendar, we have about 20 companies reporting today.  Retail seems to be the theme today with BKE, ANF, and FL.  DRYS is another notable but be careful this one can be really wild.

Action Plan

Yesterday’s short squeeze delivered nice reversal patterns in the all of the four major indexes.  The QQQ’s even managed to print new record highs during the day but settled back down to close at the exact high set on 11/8/17.  Amazing!  So, now what?  As great as that move was we have to remember that one day does make a trend!  That means it’s going to be very important for the market to show us some follow-through bullish price action.  The DIA, and the SPY, still have price resistance above and the QQQ’s closed exactly at the resistance high.  Although the IWM rallied strongly yesterday, it still has a lot of heavy lifting to do before we will see a bullish trend in the small-caps.  So, come on Bulls dig in and push hard.

As you know on Friday’s I, tend to focus on taking profits rather than adding new risk ahead of the weekend.  However, I will be building a shopping list for next week.  Of course, I never want to say never so if a great opportunity presents itself I will be more than happy to exploit it for profits.  I wish you all a fantastic weekend.

Trade Wisely,

Doug

Watch the Morning Video Here: https://youtu.be/FLpNCuV4qvI