Go Bulls

After the disappointing results from NFLX, I was ready if the Bears tried to take control but happily enjoyed increasing profits as the Bulls dug in pushing all the major indexes higher.  The NASDAQ set a new record high, and the Dow managed to hold the big psychological level of 25,000.  Go Bulls!

I, of course, would like to see the Bulls continue to drive forward but I also need to acknowledge the fact that the market has moved up very sharply and rest or pullback are certainly within the realm of possibilities.  As a result, I want to avoid chasing stocks already within a rally, and I want to be very cognizant of resistance levels.  As stock price near resistance levels, I want to more of a seller than a buyer, taking profits into strength.  Don’t misunderstand; I am in no way suggesting that the market is about to become bearish, I’m only pointing out that adding risk when a stock is at or near resistance is something I want to avoid.

On the Calendar

Today we have three potential market-moving reports on the Economic Calendar.  Frist is the Housing Starts at 8:30 AM which expects a decline in June to 1.320 million vs. 1.350 in May with permits ticking higher to 1.329 million vs. the 1.301 May reading.  At 10:30 AM we have the unforecast EIA Petroleum Stats Report which could be very important today will oil prices falling.  The to wrap up the calendar day we have the Beige Book at 2:00 PM  which the Fed uses as part of its interest rate policy decision.  Other than that we have Mortgage Applications at 7:00 AM and the Fed Chair Speaking at 10:00 AM before the House Financial Services Committee.

The Earnings Calendar shows we have 66 companies expected to report results today.  Among them are MS, and USB that report before the bell with IBM, KMI, AA and AXP reporting after the close.

Action Plan

I was happily surprised to see the bulls respond in such a strong and deliberate manner yesterday after NFLX disappointed the market.  The DIA & SPY broke above price resistance as the QQQ’s reached out for new record highs.  Markets around the world were mostly higher overnight but as I write this Futures are flat to just slightly bullish.  However, with all the earnings reports and the Housing Starts number out before the open anything is possible.

After recovering key price levels, the Bulls seem confidently in control but let’s not forget that the indexes have moved up quite sharply and a little pullback or rest to test new supports is not out of the question.  Which means be very careful entering stocks that have already several days into a rally and avoid buying if prices are at or near new resistance levels.  There seem to be high expectations for strong earnings this season, and I hope they are correct but stay flexible and focused on price action.  Trade the chart and avoid getting caught up in drama and hype surrounding earnings.  Go Bulls!

Trade Wisley,

Doug