Vague Phase 1

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Friday’s huge short squeeze rally seems the market seems to be struggling this morning with the very vague so-called Phase 1 deal as China now says they need more discussion before signing anything. Over the weekend, we’ve also learned that the Brexit deal is once again proving elusive with the Sterling reversing Friday’s hopeful gains. We also know the conflict between Turkey and Syria has escalated and that Hong Kong protesters are talking about scaling back on their activities. What a difference a weekend can make! Asian markets closed green across the board overnight, but that sentiment has not translated into bullish notions in Europe, which are currently seeing red across the board this morning. US Futures have recovered from overnight lows as the vague Phase 1 deal may be harder to close than the hopeful market initially thought. With today being a banking holiday and 4th quarter earnings beginning Tuesday a light and choppy day would not be out of the question after a what could be a volatile open. On the Calendar Because it’s the national holiday Columbus Day banks and bond markets will be closed today. As a result, we have no Economic Calendar reports today. We have just nine companies reporting earnings today, but none are particularly notable and unlikely to be market-moving. However, keep in mind, the official beginning of the 4th quarter earnings begins Tuesday morning with several big banks reporting. Action Plan What a difference a weekend can make. After a huge short squeeze rally that closed the Dow over 300 points higher on news of a partial trade deal. This morning the news seems to have reversed, suggesting that China needs more discussion before a possible deal can be signed. Details of the so-called Phase 1 deal have been few and far between; in fact one could argue extremely vague. By the way, how many Phases are there? In other news, the conflict between Turkey and Syria has escalated over the weekend with Turkey preparing to invade a northern Syrian city. The positive news of Brexit progress seems to have also shifted as many not suggest Britain will need to ask for another extension which the Prime Minister is not in favor of doing. On a technical basis the DIA, SPY, and QQQ are now well above their respective 50-day averages but have left significant gaps behind as well as not so confident shooting start candle patterns behind. As I write this report, futures are pointing to lower open but rallied to cut the overnight lows almost in half. I would not be at all surprised to see the overnight lows tested after the open. With today being a banking holiday with the bond markets closed, I’m expecting a light and choppy price action after the morning rush as we wait for the official kick-off the 4th quarter earnings on Tuesday. Trade Wisely, Doug

Friday’s huge short squeeze rally seems the market seems to be struggling this morning with the very vague so-called Phase 1 deal as China now says they need more discussion before signing anything.  Over the weekend, we’ve also learned that the Brexit deal is once again proving elusive with the Sterling reversing Friday’s hopeful gains.  We also know the conflict between Turkey and Syria has escalated and that Hong Kong protesters are talking about scaling back on their activities.  What a difference a weekend can make!

Asian markets closed green across the board overnight, but that sentiment has not translated into bullish notions in Europe, which are currently seeing red across the board this morning.  US Futures have recovered from overnight lows as the vague Phase 1 deal may be harder to close than the hopeful market initially thought.  With today being a banking holiday and 4th quarter earnings beginning Tuesday a light and choppy day would not be out of the question after a what could be a volatile open.

On the Calendar

Because it’s the national holiday Columbus Day banks and bond markets will be closed today.  As a result, we have no Economic Calendar reports today.

We have just nine companies reporting earnings today, but none are particularly notable and unlikely to be market-moving.  However, keep in mind, the official beginning of the 4th quarter earnings begins Tuesday morning with several big banks reporting.

Action Plan

What a difference a weekend can make.  After a huge short squeeze rally that closed the Dow over 300 points higher on news of a partial trade deal.  This morning the news seems to have reversed, suggesting that China needs more discussion before a possible deal can be signed.  Details of the so-called Phase 1 deal have been few and far between; in fact one could argue extremely vague.  By the way, how many Phases are there?  In other news, the conflict between Turkey and Syria has escalated over the weekend with Turkey preparing to invade a northern Syrian city. 

The positive news of Brexit progress seems to have also shifted as many not suggest Britain will need to ask for another extension which the Prime Minister is not in favor of doing.  On a technical basis the DIA, SPY, and QQQ are now well above their respective 50-day averages but have left significant gaps behind as well as not so confident shooting start candle patterns behind.  As I write this report, futures are pointing to lower open but rallied to cut the overnight lows almost in half.  I would not be at all surprised to see the overnight lows tested after the open.  With today being a banking holiday with the bond markets closed, I’m expecting a light and choppy price action after the morning rush as we wait for the official kick-off the 4th quarter earnings on Tuesday.

Trade Wisely,

Doug

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