After a glowing jobs report on Friday the bulls appeared solidly in control but then some nasty weekend bombshells reversing that comfortable Friday feeling into dread and confusion.  What a difference a weekend makes!  Weekend bombshell number-1 landed when the president announced the plan to raise tariffs against China by 25% this Friday.  China is not considering pulling out of the negotiations scheduled on Wednesday.

Weekend Bombshell number-2 landed with Iran behind new rocket attacks in Israel forcing the US to send a Carrier Group and bombers back into the Persian Gulf.  If that’s not enough toss in a huge week of earnings reports and we have a recipe for extreme volatility.  Currently the futures point a large gap down likely trapping many traders with painful losses at the open that could easily create more selling pressure.  Fasten those seat-belts it’s likely going to be a very rough ride today.

On the Calendar

On the Earnings Calendar we have around 225 companies reporting earnings today.  Some of the notable reports include AIG, AWR, BHC, CBT, TACO, FRGI, GLUU, HTZ, LBTYA, OXY, PETS, SKT & SYY.

Action Plan

What a difference a weekend can make.  We closed on Friday with the bulls in control after a fantastic jobs report with the hope of a forthcoming trade deal this coming Friday.  With the President now planning to increase tariffs by 25% on Friday, China may cancel the next round of negotiations scheduled to begin on Wednesday.  If that’s not enough Iran is once again acting up and armed conflict with the country may be on the horizon.  Toss in a huge day of earnings reports and we have a recipe for some bad tasting volatility.

Asian markets closed sharply lower overnight as you might have expected in the face of escalating trade tensions.  European markets are surprisingly mixed with the FTSE modestly higher while the DAX and the CAC are sharply lower.  As a result, the Dow Futures are pointing a gap down of nearly 500 points while the NASDAQ futures are looking at a whopping 170 point slide south at the open.  There will be more than enough pain to go around this morning but try not to panic.  Focus on the price action of the charts and make solid business decisions rather than emotionally based reactions.

Trade Wisley,

Doug