Price is King

With all our technology, designer scans and flashy indicators, there is one undeniable truth; Price is King.  Traders will spend years trying to find the perfect combination of indicators and write complicated scans in a constant search for the holy grail.  I’m no different and have to confess I wasted years on that quest. It was not until I became a student of price that I finally began to experience real account growth.

The simple concepts of price support, price resistance, and trend often get ignored as traders focus only on their indicators.  Remember indicators don’t pay you!  It’s only when price moves we can get paid.  The last few days I have suggested caution and to be careful not to over-trade.  Not because I want to see the market pullback but because of price action and price resistance was telling us to be cautious.  Price is King and will provide the clues for better trading results if we become students of price.

On the Calendar

Friday begins with the potential market-moving CPI Report at 8:30 AM Eastern.  Forecasters expect the CPI to rise 0.2 percent with the year-on-year coming in unchanged at 2.9 percent and the core rate at 2.3 percent.  The Baker-Hughes Rig Count is a 1:00 PM and the Treasury Budget closes the day at 2:00 PM.  Consensus for July is for a monthly deficit of 73.5 with both spending and tax receipts on the rise.

On the Earnings Calendar, we finally get a little break with only 46 companies reporting earnings today.  Although the bulk of earnings reports this season are now behind us, we still have more than 400 on the calendar for next week so keep checking those earnings dates.

Action Plan

Although hopeful the Bulls could push us resistance levels yesterday, the Bears gained a slight upper hand by the close.  Durning the night Asian market were mixed but mostly lower and Europian markets are currently lower across the board.  As a result, the Dow futures are currently pointing to a gap down of nearly 100 points as I write this.  At least, for now, it would seem that resistance has done its job but let’s not count the Bulls out just yet.  A light pullback could be all that’s needed for the Bulls to gather energy and reinforcements to mount an attack on the highs.

As the weekend approaches, keep in mind, that the trade tensions between the US and China continue to grow.  Carefully consider how much risk you’re carrying into next week with that in mind.  There is a very good chance I will trim some positions and take some profits as take my normal trip to the bank on Friday.  I wish you all a fantastic weekend.

Trade Wisely,

Doug