Defend Price Support

It was nice to see the Bulls step up and defend price support levels yesterday.  Futures are suggesting the first directional follow-through in the Dow for the last 5-days of trading.  Even the Dow Transports, (IYT) held support suggesting at least a short-term rally could be in the cards.  The VIX which was stubbornly clinging to price support level finally gave way to bullishness sinking sharply by days end.  Let’s keep in mind that even though the futures are pointing to a nice gap up that Thanksgiving is just 2-days away.  Volumes could begin to drop off quickly at any time.  Even the best of trade signals can and will stall if volume dries up so keep that in mind as you plan.

On the Calendar

On today’s Economic Calendar we have the very important Existing Home Sales at 10:00 AM Eastern.  Home sales rose slightly by 0.7% in September to a 5.390 Annualized rate.  Forecasters are suggesting a solid growth in home sales with an expected October print of 5.440 million.  There are a couple of mid-day bound auctions, but then at 6 PM, Janet Yellen Speaks.

On the Earnings Calendar, we have just short of 60 companies reporting earnings today.  LOW has already reported better than expected results this morning.  Others include CPB, JEC, KIRK, MBT before the bell and CPRT, CRM, GES, DRYS and GME after the bell.

Action Plan

The market opened a bullish yesterday but a bit on pins and needles with the question; Will the Dow hold at support?  The answer came back as yes and now requires a bullish follow-through to confirm.  Both the SPY and QQQ’s turned in a lackluster performance yesterday while the IWM continued to show life rallying back toward resistance.  As I write the Futures markets are bullish across the board suggesting might actually see the second day in a row in the same direction.  Something we have been unable to do for the last five trading days!

Of course, I will continue to manage current positions, but as we move toward the holiday, I will be watching closely for reasons to take profits and reduce risk.  I will also continue to look for new entries and building the watchlists of qualified stocks.  Be prepared for the possibility that volumes could begin to drop off quickly as Thanksgiving approaches.  Great by signals produced in the morning rush can easily die on the vine as volumes drop into the afternoon.  Remember it’s the big institutions that move the market.  As their traders pack up for holiday vacations volumes can drop quickly, and the price action becomes choppy, boring and virtually untradeable.  Keep that in mind as you prepare plans for the remainder of the week.

Trade Wisely,

Doug