SPY taking the lead.

It was nice to see the Bulls pushing for higher prints yesterday with the SPY taking the lead as the only index thus far being able to break above the prior high.  Volume has been light, and price action has been somewhat tentative in this rally.  With August being a big summer vacation month its not a big surprise to see lighter volume but it does require us to exercise some caution as we test price resistance levels.

Futures are pointing to a higher open this morning but remember as we test resistance levels we need to watch for possible reversals.  As I mentioned yesterday, be careful with how much risk you’re carrying at resistance.  As an example, I plan to take some profits reducing risk as we grind toward resistance rather than adding additional risk.

On the Calendar

The JOLTs report at 10:00 AM Eastern is the only potential market-moving report on today’s Economic Calendar.  Forecasters expect job openings number to increase in May to 6.638 vs. 6.650 in June.   Other than that, we have the Redbook @ 8:55 AM, two Bond events @ 11:30 AM and 1:00 PM with Consumer Credit closing the day @ 3:00 PM.

On the Earnings Calendar, we have more than 385 companies reporting to keep us on our toes.

Action Plan

Yesterday the bulls continued to push higher with a steady slow grind, but only the SPY managed to break above the prior high.  The DIA, QQQ, and IWM all move up but continue to remain under price resistance.  The SPY is now less than 2-points away from testing record highs, and with Futures currently pointing to a higher open, it seems likely to occur as long as there are no major surprises in earnings reports.

You may have noticed that volume has been quite light in this rally.  While that is a bit of a concern keep in mind that August is a big vacation month and it not out of the ordinary.  However, it does warrant a little caution as we approach resistance levels.  Remember resistance is where we have to keep a watchful eye on price watching for the possible clues of breakout or failure.

Trade Wisely,

Doug