Markets gapped lower again Tuesday, attempted to rally again (on Fed Chair Powell’s afternoon statement that he sees the Fed balance sheet expanding again soon), but then sold off hard the last hour of the day, closing near the lows.  So, the Dreaded-h pattern is now near breakout in all major indices. 

Overnight, Asian markets were on the red side of flat, but European markets are all strongly in the green.  As of 7:30 am, U.S. futures were pointing to a large gap up (about 1%) on overnight reports that China is open to a partial trade deal. (Just bear in mind the market whip on these same rumors the last few days that were always countered with a rumor in the opposite direction…and China has promised a counter move to the most recent U.S. blacklist / Visa sanctions.)

On today’s economic calendar we see JOLTS at 10am, Oil Inventories at 10:30, Chair Powell speaks again at 11am and the Sept. FOMC minutes come out at 2pm.  Also, the Impeachment news cycle will surely keep churning and beware of that Chinese retaliation for the blacklist and putting restrictions on Chinese officials and executive’s travel visas.  Finally, Turkey continues to move troops right to the border of Syria. So, news of that situation may also drive markets.

The bottom line remains to be cautious, very quick in your trading time horizon or both. Gaps and whiplash are not good conditions for swing trading. So, be careful chasing one nice (or ugly) candle. However, the downtrend remains in control for now.  

Ed

For Your Consideration: Here are a few tickers we will be adding to our swing trade watch-list. Short – TSN, LSCC, SYF, LDOS, KLAC, MDT, EL  Long – DOCU, UDR, EQR, CYH, KBH, AMH, CX, DHI Trade smart, and trade your trade. Stocks we mention and talk about are not recommendations to buy or sell.

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