Tenacious Bulls

Tenacious Bulls gathered energy at the rest stop on Wednesday to once again set new records in the SPY, QQQ, IWM yesterday.  What goes up must eventually come down, but with the possibility of a trade agreement between the US and Canada by Friday, I think it would be unwise to anticipate short positions.

However, with a 3-day weekend just around the corner and the likelihood that many traders will extend the holiday by taking off Friday and/or Tuesday don’t be surprised to see some choppy light price action.  Also with the risk of market-moving news over a 3-day weekend don’t be surprised to see some profit-taking before the end of the week.

On the Calendar

Weekly Jobless claims kick off the Economic Calendar at 8:30 AM Eastern.  Consensus expects claims to come in at 214,000 showing continued strong demand for labor.  Also at 8:30 AM Personal Income and Outlays which expect incomes to rise 3.0 percent with consumer spending up 0.4 percent.  The overall PCE is looking at a year-on-year rate of 2.3 percent which is an increase of 2 percent.  At 10:30 we get the latest reading on US Natural Gas supplies, however, there is no consensus forecast.  Then at 4:30 PM the Fed Balance Sheet.  We also have three Bill Announcements at 11:00 AM and the Money Supply report at 4:40 PM.

On the earnings calendar, there are over 50 companies reporting today.  Among those reporting before the bell, DG, DTLR, SHLD, and SIG.  After the close AMBA, LULU, ULTA, and COO are among those reporting results.

Action Plan

More record closing highs in the SPY, QQQ, and IWM as the took advantage of Wednesday’s rest stop to gather energy.  Unfortunately, Asian markets closed mostly lower overnight, and European are currently slightly lower across the board.  US Futures are pointing to a lower open with the Dow currently suggesting a gap down of more than 50 points.

With the Labor Day 3-day weekend just around the corner, a little profit-taking after this strong bullish run would not be all that surprising.  However, the Bulls have shown remarkable tenacity this week, and with the possibility of a Canadian/US trade deal by Friday, I wouldn’t want to anticipate a selloff by picking up some short positions just yet.  I have been scaling out of trades and taking profits since Tuesday of this week and will likely continue to so lowering my risk as we head into the long weekend.

Trade Wisely,

Doug