Fear-Of-Missing-Out

During earnings season all traders experience the Fear-Of-Missing-Out emotion.  We see the big price moves and the potential of making the big bucks, and we race blindly to get our piece of the pie.  As emotion grows, discipline gets pushed aside, and the trader begins to break every trading rule in the book.  If you owned a trading firm and your traders acted in such a way you would fire them on the spot. Right?

Remember trading is a business.  You are competing with the best and brightest and believe me; they want your money as much as you want theirs.  As a retail trader, you must hold yourself accountable and maintain your discipline at all times.  If you let emotions such as the Fear-Of-Missing-Out drive your decision making then get ready to watch your money disappear.

On the Calendar

New Home Sales and the Petroleum Status Report are the potential market-moving events on today’s Economic Calendar.  According to consensus the June new home sales at 10:00 AM eastern will decline to 668,000 vs. 689,000 May reading.  Then at 10:30 AM we will get the latest reading on unforecast US Petroleum Supplies.  We have at 7:00 AM report of Mortgage Applications and bond auctions at 11:00 AM as well as 1:00 PM to wrap up the calendar day.

On the Earnings Calendar, the reports continue to ramp up with more than 230 companies scheduled.  Among the pre-market reports are BA, KO, UPS & GM with post-market reports including FB, F, LVS, & MAT.

Action Plan

A very nice move higher yesterday with the market reacting the to positive earnings reports.  However, the overall price action of the day was anything but smooth experiencing two nasty whipsaws.  Overnight Asian and European mixed seeming to follow the lead of the bullish but choppy US indexes.  Futures are taking a wait and approach this morning with more than 100 earnings reports to react to before the bell.  With more than 600 reports between now and the close on Friday, we and expect a surge in price volatility as the market reacts.

If you’re inexperienced, it may be best to stand aside and watch the drama unfold from the safety of the sidelines.  Those who do trade will have to stay very focused on price action clues and willing to hold through potentially violent intra-day swings and large morning gaps.  Although the earnings drama fuels the Fear-Of-Missing-Out and the desire to rush, we need to stick to our rules maintaining a business focused discipline.  If you trade your emotions, you’ve already lost the battle.

Trade Wisely,

Doug