History-making bull run.

New records across the board as the market reacts to the government closure coming to an end.  The bulls are running so hard it makes you wonder if their hearts could suddenly and without warning explode.  One thing for certain, I’m grateful that I can participate in this history-making bull run.  The futures have traded all over the place this morning.  I can only guess its due to the tsunami warning for the west coast after a big earthquake in Alaska.  The price action has been very fast so be careful at the open and for goodness sake don’t chase.  There will be a day when the tide will go rushing out, and profit-taking will begin.  Avoid complacency and have a plan to protect profits and capital if/when it occurs.

On the Calendar

Tuesday is another very light day on the Economic Calendar.  The is a Richmond Fed Manufacturing report at 10:00 AM which is very unlikely to move the market.  A couple bound auctions and a Fed Speaker after the market close at 6:30 PM.

On the Earnings Calendar, there are 67 companies expected to report earnings.  Please make sure you are checking reporting dates of companies you own or those you are thinking of buying.  Today we have a showing of some big blue-chip stocks like KMB, VZ, JNJ, and PG.  Reporting after the bell is TXN, CREE, and UAL.

Action Plan

Due to a family emergency, I had to quickly lever yesterday missing out on the surge higher.  Record highs in all four major indexes occurred as buyers rushed in after the news that the government shutdown was over.  If you thought the market looked overextended before the yesterday stretched that rubberband even tighter.  NFLX reported blow out earnings after the bell and futures were very bullish all night.  However, starting at 6:00 AM Eastern the futures suddenly started moving south and at this moment are continuing to do so.  The price action is very fast, so anything is possible by the open.

Without question the bulls are in control and the market trends are higher.  However, the market also appears to very extended which could trigger some profit-taking at any moment so I think it would be wise to exercise a little caution.  The current erratic price action in the Dow Futures should be a reminder just how quickly a shift could occur so stay on your toes.  Having said that earnings could continue to propel the market higher so avoid prediction and trade the price action making sure not to chase stocks that are already well within their run.

Trade Wisely,

Doug