New all-time highs

Fortune favored the bold this week with the Dow surging over 575 in three days to set new all-time highs for the index.  Not wanting to be left behind the SP-500 joined in on the bull run also closing at a new record high.  Clearly, the bulls are in control, but I am just a little concerned that exuberance may have temporally over extended prices in the short-term, particularly in the Dow.  As a result, I was a net profit taker yesterday and will likely continue to do so today reducing my risk into the weekend.

Please don’t misunderstand I am not bearish, and currently, there are no signals in the market to suggest bearishness!  I am simply following my rules of taking-profits into strength and doing my job as a trader; making money!  Remember today is Quadruple Witching day which can result in increased volatility and very choppy price action.  Also as you plan your risk into next week keep in mind w have an upcoming FOMC meeting and a possible interest rate increase for the market to deal with.

On the Calendar

A very light day on the Friday Economic Calendar with only two reports neither expected to move the market.  The PMI Composite FLASH comes out at 9:45 AM Eastern followed by the Baker-Hughes Rig Count at 1:00 PM.

Only two Earnings Reports today, both happen after the close today.  They are ELLO and NTZ which are very insignificant reports.

Action Plan

The Bulls showed tremendous energy yesterday gaping up, holding the gap and then continuing higher the rest of the day in both the Dow and the SP-500.  The Dow closed up 251 points on the day and more than 577 points in just 3-days to set a new all-time high.  The SP-500 also closed at a new record high while the NASDAQ challenged the price resistance of last week.  Overnight Asian market all closed higher and European markets are currently very bullish across the board.

As I write this, the Futures are pointing to a flat to modestly bullish open, but you may notice that the SPY is indicated to open lower due to dividend payments.   Today is a Quadruple Witching day which means market index futures, index options, stock options, and stock futures all expire today which usually results in increased volatility.  With very little economic news and earnings reports to drive the market, we could see an exceptionally choppy day.  I used the rally yesterday to take several profits and will very likely do more profit-taking today to reduce my risk heading into the weekend.  As you plan ahead, remember that the FOMC begins next week and interest rates are likely to rise.  Have an awesome weekend everyone.

Trade Wisely,

Doug