Price Resistance Hurdle

After an exuberant news driven reversal of 700 Dow points, the Bulls face the tough price resistance hurdle to set new record highs in the SPY, QQQ, and IWM.  The current momentum certainly favors the Bulls, but we must always have a healthy respect of resistance and remember that the Bears rarely give up without a fight.  Plan your risk carefully and remember buying at resistance is a risky business if the Bears rally in defense.

Asian markets were mixed but mostly higher overnight while European markets are decidedly bullish this morning.  Consequently, the US Futures are currently pointing to a modestly bullish open.  With a light morning on Earnings Calendar and no major Economic reports standing in the way the path to a breakout appears open if the Bulls can find the energy.

On the Calendar

We coast into this week’s Economic Calendar with a very light day and no expected market-moving reports.  At 11:00 AM we have a Fed Speaker and a Bond Announcement.  Then at 11:30 AM there are two Bond Auctions.

The Earnings Calendar this Monday morning shows 46 companies are expected to report.  The most notable before the bell is EL with AABA reporting after the market close.

Action Plan

After a very volatile week where Wednesday’s panic reversed to jubilation on Thursday moved the Dow 700 points higher to challenge resistance by the close on Friday.  With the Asian and European markets mostly higher, current Dow Futures suggest a bullish open kicking off this weeks trading.  The big question is will the Bull have the energy to punch the SPY, QQQ, and IWM through to new record highs.  The DIA still has a lot of work to do if it intends to set a new record, however, a breakout and hold above the March high certainty setup the opportunity to do so.

It would be great to see the momentum of this current rally breakthrough resistance levels.  However, we must set aside our bias and plan our day with the very real possibility that the Bears could defend price resistance!  After a 700 point 2-day rally, a rest or pullback would not be out of the question.  Remember buying at resistance comes with a higher risk so plan your trades carefully.

Trade Wisely,

Doug