Another Victory for the Bulls

After closing at new records high in the QQQ’s and IWM yesterday futures currently suggest yet another bullish open this morning.  Even though the DIA and SPY close the day flat, I consider that a victory for the Bulls as they held on to Monday’s strong performance.  Although there are lots good charts, If your not already in this rally I would caution you not to chase.

The fear of missing out is a very strong emotion that every trader has to overcome.  If you miss an entry, it’s usually better the just let it pass then to chase into the trade.  I can tell from painful experience that chasing often has the trader entering at or near the point when the stock pulls back.  Instead of chasing, mark up the chart put it in a watchlist and wait for the next entry signal.  As long as a stock maintains, a trend there will be more opportunities to profit.

On the Calendar

There are three potential market-moving events on Wednesday’s Economic Calendar.  At 8:30 AM Eastern we get readings on both International Trade & Productivity and Costs.  Forecasters expect the international trade deficit for goods and services to hold steady in April at $49.0 Billion.  Productivity is expected to grow 0.7 percent with unit labor costs up 2.8 percent vs. the 2.7 reading last month.  At 10:30 AM we get the latest reading on Petroleum Supplies which have no forward forecast.  Other than that we have a reading of Mortgage Applications at 7:00 AM and Treasury STRIPS at 3:00 PM but are unlikely to move the market.

On the Earnings Calendar, we have 46 companies reporting quarterly results.  Among them are SIG which reports before the bell and FIVE reporting after the close.

Action Plan

Yesterday we saw both the DIA and SPY chop sideways ending the day about where they started.  After such a big move on Monday, I view this a win for the Bulls.  The QQQ’s closed the day at a new record high as did the IWM which is showing impressive strength and leading the overall market.  During the evening Asian and European were both bullish giving the US Futures an overnight boost.  As I write this Dow Futures are pointing to a gap open of nearly 100 points, but that could certainly change as earnings and economic data come out.

While I remain overall bullish, I’m watching price action closely for clues pullback or profit taking as this rally matures.  If the QQQ’s open positively as the futures currently suggests, it’s the 7^th straight day of gains a reason to watch for signs of profit taking.  As the QQQ’s and IWM gap up to new record highs, be careful not to chase stocks late there run.  Go Bulls!

Trade Wisely,

Doug