Once again US/China trade uncertainty raises its ugly head providing the Bears the energy to drive back the Bulls and test key support levels.  As uncomfortable as it might have been the tenacious Bulls stepped up and effectively defended price supports and the overall bullish market trend.  Currently the futures are suggesting that Bulls will once need a strong defense with an opening gap down of more than 100 points.

Overall this pullback was expected and normal healthy price action but the political uncertainty raises an additional challenge as traders face the weekend risk.  Remember you don’t have to trade every day and the view from this sideline can be very comforting as we head into the weekend.  After a great month of profits the last thing I want to do is try and predict the outcome of political uncertainty and give back hard-earned gains.  As a result my plan for the day is to protect my capital and quietly slide into a restful weekend.

On the Calendar

On the Earnings Calendar we get a little break with only 52 companies reporting.  Among the notable reports,  ARNC, EXC, HAS, PSX & VTR.

Action Plan

Yesterday’s selloff became a bit rough when the head of the US Economic Council reported that the US / China negotiations are still a long way from a deal.  The market then received a second blow when the Whitehouse moved the North Korean meeting to March.  Asian markets were lower across the board last night while European markets mostly chop sideways nearly flat on the day.  As I write this US Futures suggest a gap down open testing yesterdays lows and key support levels.

On the bright side the key levels I mentioned in yesterdays note held as support as the bulls effectively defended them with a nice late day rally.  With the looming political uncertainty of US/China trade what will traders do as we head into the weekend?  Without question the bullish trend is currently still intact and this pullback is nothing more than healthy price action.  However, it could easily become serious if the bulls retreat ahead of the weekend.  Let’s hope the new cycle is quiet today, cooler heads prevail and bulls continue to defend price support.  Have a great weekend everyone!

Trade Wisely,

Doug