Yesterday selling us reminded us that bears still exist and that an overextended market condition can produce quick and painful selloffs.  What happens next could be very important to the short-term future direction of the market.  If the bulls are strong enough to defend yesterday’s lows over the next few days, Monday’s price action will be chalked up to volatility.  However, if the bears show the ability to create a lower low in the next few days, they could gain the upper hand can create technical damage in the index charts.  Expect the Georgia runoff election news to create pice sensitivity over the next 24 hours.

Overnight Asian markets recovered from early losses after the NYSE reversed its Chinese telecom delisting decision.  European markets see modest losses across the board this morning as England goes into a nationwide lockdown.  U.S. futures lose overnight gains turning modestly bearish as we head toward the open with ISM Mfg. Data in focus at 10 AM Eastern. 

Economic Calendar

Earnings Calendar

On the Tuesday earnings calendar, we have twelve companies listed but only one verified report.  Keep an eye on SGH reporting after the bell today.

News & Technicals’

A late afternoon decision by the NYSE reversed their decision to delist three Chinese telecom giants helping the overnight futures trade higher.  Yesterday’s pop and drop price action left behind bearish candle patterns as the market reacted to Iranian military action, the pending Georga Senate runoff election, and surging pandemic concerns.  Although there is a reason for caution heading into the Tuesday open, the bulls fought back, holding on to essential supports such as the psychological Dow 30,000.  Remember, one day does not make a trend, so what happens next will be very important to the market’s short-term direction.  Should the bulls prove strong enough to defend and recover broken trends, yesterday’s selloff could prove to be nothing more than volatility.  However, if the bears can produce a follow-through, lower low in the next few days, they could gain the upper hand. 

News out of Georgia may well create some price sensitivity and volatility today and into tomorrow open.  Plan your risk carefully.  Also, more news such as England going into another pandemic triggered, countrywide lockdown, New York considering making it a crime to avoid vaccination, or the possible addition of more public restrictions could add to the price volatility.  Stay on your toes and be careful not to overtrade in this environment.

Trade Wisely,

Doug