Day-1, SPY New Record High

If you ever had a question if the bulls still controlled the market that should have dissipated yesterday.  Day-1, SPY New Record High and the QQQ’s are not far behind.  A good reminder to never short a trending market.  Over the next three days, there is a lot of important economic data coming out, and I would be surprised if any of it is not supportive of current prices.  Also, keep in mind that Earnings Season is just around the corner and many stocks could rally in anticipation.  Only yesterday in the QQQ we saw how just how much analysis upgrades on key stocks can dramatically reverse an indexes direction.  By the way, analysts are bullish on earnings growth this year.

On the Calendar

The hump day Economic Calendar really gets going at 10:00 AM Eastern with the ISM Mfg. Index and Construction Spending.  Consensus for the December ISM is down just slightly to 58.0 vs. 58.2 last report but continues to be very strong.  Construction spending is expected to make a solid gain of 0.6% with residential spending leading the gains.  Then at 2:00 PM we have the release of the FOMC minutes.

There are 12 companies expected to report earnings today.  UNF & CNC report before the bell with RAD and RECN after the bell.  Make sure you are checking as part of your daily preparation.

Action Plan

The DIA, SPY, and IWM continue to remain in a chop zone however at the end of the trading day seemed to have found some bullish inspiration.  The QQQ, on the other hand, had an incredible day completely reversing a rather bearish appearance to a full on bullish stance.  I would expect the QQQ’s to make its first record high of 2018 very soon an accomplishment the SPY managed to pull off at the close yesterday.

Futures are currently pointing to more than a 40 point Dow gap up at the open.  Keep in mind a Dow 25,000 print is not that far away and after resting the last couple weeks may soon find the energy to make a push higher.  The VIX made a sharp decline yesterday afternoon and now looks like it could once again test historical lows.  There is no fear in this market.  Keep in mind that the market could easily slip into choppy price action after the morning rush as it waits for the release FOMC minutes.  Expect higher volatility right after the release as the market digests the new information.

Trade Wisely,

Doug