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Willing to Negotiate

August 29, 2019 by Doug Campbell

China surprised the market at 5:30 AM this morning saying they are willing to negotiate to resolve the trade war sharply reversing the US Futures from overnight lows. Traders holding long positions will feel the sweet relief of a big gap up open. However, traders caught short will suffer and may experience the pain of a short squeeze. Though this is a very positive development, make sure to maintain perspective and not get caught up in the hype. Saying they are willing to negotiate is a long way from signing a binding deal, and there are likely going to be a lot of drama along the way.

Asian markets closed mostly lower overnight as Treasury yields continued to deteriorate. European markets reversed early losses after the China news and are currently green across the board the morning. US Futures leaped dramatically on the prospect of a China re-engaging in trade talks with the Dow Futures now pointing to a gap up open of more 250 points. Price volatility will likely be wild this morning, so stay disciplined to your trading plan and rules to avoid emotional decisions influenced by the drama this news has created.

On the Calendar

Sixty-three companies are fessing up to their quarterly earnings results this Thursday. Notable reports include DG, ULTA, ANF, ABOC, BBY, BURL, COO, DELL, DLTR, HAIN, TD, and WDAY.

Action Plan

Futures that had been bearish most of the night quickly rallied about 5:30 AM this morning when China says it willing to resolve the trade war and return to the negotiations table. Although agreeing to talk is a long way from agreeing to a binding deal to level the playing field for trade between the two countries, its certainly a positive step forward. Unfortunately, China has also decided to sent troops into Hong Kong. Lets’ hope this conciliatory action is not merely a distraction as they use force to put down the long-running protests.

Market bulls will, of course, be very happy this morning but bears caught short are likely to feel the pain of a short squeeze this morning. I would be careful not to get caught up in the hype, keeping in mind bond yields, Brexit and that an actual signed deal is still likely months away. Also for the market to digest is the big morning on both the economic and earnings calendars. Price volatility could be wild this morning, so plan your approach to the market carefully.

Trade Wisely,

Doug

Bulls Making A Break For It On A Bullish Piercing Candle

August 29, 2019 by Rick Saddler

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The market (SPY), The Bulls, are making a break for it, premarket price is over our $289.60 line, and we may even see the 34-EMA challenged today. A close over $294.00 would be a substantial bullish move and kick the bears in the teeth. But let’s take one step at a time. Price action yesterday was fantastic with a Bullish Piercing Candle, as always we need sustained follow-through. Don’t forget we have a 3-day weekend coming up and the Tariffs are slated for September 1, so they say. Yesterday I sent out a note Via TEXT on PFE, and we bought it going into the close. Are you registered for text alerts?

Bullish Piercing Pattern: First, there must be a clear and definable downtrend in progress for the pattern to qualify as a Bullish Piercing pattern. Second, the first candlestick (which appears at the end of the downtrend) must be a black (or red), bearish candlestick. Third, the second candlestick must be white (or green) and bullish. Fourth and finally, the second candlestick (the white one) must open below the black candlestick and close above the black candlestick’s midpoint. So if you mark a dotted line through the vertical center of the black candlestick, does the white candle close above it? If so, it can qualify as a Bullish Piercing Pattern. Read More About Bullish Piercing Pattern.

The I path Series S&P 500 VXX Short Term Futures ETN. The VXX closed with a Dark Cloud Cover, once again held back from the $30.25ish level. As long as the T-Line stays above the VXX, I will be concerned that the VXXX buyers have not entirely left.

😊 Have a great trading day – Rick

Trade-Ideas

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The hits keep on coming!

August 28, 2019 by Doug Campbell

The hits keep on coming! There is a point in nearly every market selloff when it seems bad news continues to pile on with one hit after another. This morning we wake up to a worsening yield curve as the 30-year bonds hit new record lows. The Sterling rapidly falls as the Prim Minister confirms he is moving to suspend parliament, raising the risk of a no-deal Brexit. As if to add insult to injury, China has yet to confirm they will re-engage in trade negotiations as the president alluded to Monday morning. Yesterday’s pop and drop that left behind bearish engulfing patterns on the index charts sure didn’t help the technical’s or inspire much confidence.

Overnight Asian markets closed flat but mostly lower in reacting to the declining 30-year bond yields. European markets mostly lower this morning as Brexit fears rise and the Sterling falls. US Futures that had held bullish gains through the night now point to a flat slightly bearish open ahead of earnings reports. Caution continues to be warranted as you plan your day ahead.

On the Calendar

Wednesday’s Earnings Calendar has just over 70 companies reporting quarterly results. Notable earnings include BOX, COTY, DAKT, EXPR, FIVE, GES, HRB, MOV, PVH, TIF, VRNT, and WSM.

Action Plan

My goodness, there is a lot going on this morning affecting the market. The 30-year bond is hitting new record lows as the yield curve inverts even further. Most negatively are those on a fixed income, which may force many into higher risk dividend investments to make ends meet. The British Prime Minister Boris Johnson move to suspend parliament, causing the Sterling to fall and raising the risk of a no-deal Brexit. US Futures quickly pared overnight gains after Johnson confirmed the rumor in a speech today.

Yesterday’s pop and drop price action added some technical damage, leaving behind bearish engulfing candle patterns as another day passes with China not confirming a resumption of trade negotiations. I think the market must come to grips with the very likely increase from 25 to 30 percent tariffs. With little on the economic calendar today, there will little to distract the market from the yield inversion and trade war uncertainty. Plan your risk carefully.

Trade Wisely,

Doug