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Yesterday’s slow but steady selloff added to the technical damage of the index charts drawing the first lower high since mid-May.  That officially creates at least a short-term downtrend as traders look for safety amidst, fluctuating currencies and bond yields inching toward the dreaded inversion that often signals a coming recession.

Overnight Asian markets closed lower across the board as protesters fight for greater democracy in Hong Kong, and China threatens military action.   Across the pond, European markets are also modestly bearish this morning in reaction to all the political turmoil.  US Futures currently indicate a flat to slightly bearish open as traders nervously watch bond rates ahead of the CPI report at 8:30 AM Eastern.  With yesterday’s price action, we can’t rule out the possibility of a test of last weeks lows.  However, with market emotions so high anything is possible, so it would be wise to remain focused and flexible.

On the Calendar

On the Tuesday Earnings Calendar, we have nearly 175 companies reporting results today.  Among the notable reports, AAP, EAT, ELAN, JD, TLRY, and YY.

Action Plan

Markets sold off slowly but steadily yesterday as traders closely watched bond rates that continued to inch closer to the dreaded inversion that often signals a coming recession.  More importantly, the selloff created technical damage leaving behind a lower high on the daily chart, which indicates the establishment of a downtrend.  Trade war uncertainty, bond rates, fluctuating currencies, and the massive protests in Hong Kong; it’s no wonder that traders are looking to protect their capital.

According to reports after the bell yesterday, there was a problem that affected the markets during the last 50 minutes of trading where real-time prices were not displayed.  How that may or may not change the look of charts at the open today will be interesting.  Currently, futures are once again getting the morning pump and rallying off overnight lows ahead of earnings reports and the 8:30 AM Eastern CPI report.  At this point, we should not rule out the possibility of a retest of last weeks lows, but with market emotions so high anything is possible so stay focused on price action and remain disciplined to your rules.

Trade Wisely,

Doug

Growing trade tensions and expanding Hong Kong protests and China once again lowering the Yuan overnight has the market under some bearish pressure this morning.  Not helping that sentiment is the fact that Golden Sachs lowered economic growth estimates rising fears of a recession.  If the indexes fail, creating a price action lower high, the technical damage of the charts could become severe and officially mark the beginning of a market downtrend.  The bulls must defend Friday’s low or expect the bears to be emboldened pushing the indexes lower once again.

Overnight Asian markets closed mixed but mostly modestly higher as trade war tensions dampen activity.  European markets currently see modest declines across the board ahead of the US Market open.  As of now, US Futures suggest a gap down open between 150 and 200 Dow points.   Fear could quickly turn to panic selling if Friday’s lows fail as support.  We should continue to expect high price volatility, intra-day new driven reversals, and big overnight gaps making the markets very difficult to navigate for swing and position traders. 

On the Calendar

On the Monday earnings calendar, we have just short of 130 companies expected to report earnings today.  Notable reports today include GOLD, SYY, and TME.

Action Plan

Massive protests in Hong Kong continue to grow spilled into the airport, forcing the cancelation of all flights during the night.  The violence is also growing between police and residents asking for greater democracy and a release from Chinese influence.  So as trade tensions between China and the US grow leader XI Jinping is facing his greatest challenge to his power since coming into office.  Also during the night China once again lowered the midpoint of the Yuan slightly setting the currently below Friday’s session lows.

Over the weekend Goldman Sachs cuts their economic growth forecasts citing the lingering trade war and rising fears of a recession.  After a nice afternoon comeback on Friday that saw indexes recovering the moring session selloff, US Futures are under bearish pressure this morning.  A lower high failure near the 50-day moving average is likely to embolden the bears and creates severe technical damage to the index charts.  If the bulls are unable to defend Friday’s price low, panic could trigger a wave strong selling pushing the indexes past last weeks lows where the SPY and QQQ could test their 200-day averages.  Let’s hope the bulls find enough inspiration in earnings reports to fight hard!

Trade Wisely,

Doug

As bond yields inch toward the dreaded inversion and trade war jousting continues, there is certainly plenty of uncertainty to unsettle the markets as we head into the weekend.  With most of this earnings season now behind us, the market will now have to confront its global economic fears directly.  Here in the US jobs numbers remain very strong, and the consumer is still very confident, but as this trade war lingers on and the two superpowers exchange punches anything is possible.

Asian markets finished the week mixed but mostly lower after resetting the midpoint of the Yuan just below the key benchmark of seven.  European markets are seeing red across the board this morning as political turmoil in Italy has bank price plunging.  As we head into the weekend, ahead of earnings reports and the PPI number at 8:30 AM Eastern, US Futures point to bearish threatening to break the 2-day relief rally.  It’s been a wild week, and it looks like the volatility will extend right into the weekend.

On the Calendar

On Friday’s Earnings Calendar we get a little break with just over 100 companies reporting today.  Next week we have just two triple days of reports with the vast majority of reports this quarter now in the rearview mirror.  With mostly small caps reporting today, there are none that I would consider particularly notable.

Action Plan

Trade war fears are once again raising it’s ugly head this morning as China now plans to stop receiving US crude imports as its next punch in the fight.  Oil has already declined sharply as concerns of global growth have spread in recent months if China reduces its imports oil prices will likely remain under pressure.  Another major market concern is the possible yield curve inversion between the 2 & 10-year bonds often as a signal of recession.  With the vast majority of earnings season behind us, the market will directly confront its overall economic fears in the coming weeks.

As a result, there is a lot of uncertainty as we head into the weekend, and traders should carefully consider how much risk they want to carry.  With the market very sensitive to bond and currency fluctuations, anything is possible over the weekend.  After 2-days of a relief rally that moved the indexes up sharply, they will now confront significant price and key moving average resistance.  Currently, US Futures are pointing to a gap down open of more than 100 Dow points to kick off Friday’s volatility.  I wish you all a wonderful weekend.

Trade Wisley,

Doug

It was a nice relief to see the markets begin to rally off of morning session lows as bond rates began to stabilize after their wild morning fluctuations.  As great as it was let’s not forget that a bounce off the lows does not make a trend and that there are still significant price resistance levels and technical damage the market must overcome.  Yesterday was a positive beginning, but now we need the price to follow-through with additional bullish price action.  Keep in mind the Bear’s may have retreated yesterday, but we can’t rule out the possibility they are just regrouping for another attack.  They are unlikely to give up easily.

Asian markets saw green across the board at the close after China took further steps to stabilize the Yuan.  European markets are showing modest gains in response to bond rate stabilization.  Ahead of a huge day of earnings reports, the US Futures are currently flat but have leaned to the bullish most of the morning.  I would expect another day of challenging price volatility and would not rule out the possibility of additional bear attacks.

On the Calendar

Today we have the biggest day of earnings reports with more than 500 companies fessing up to results.  Notable reports include AL, AU, CAH, CBS, KHC, MGA, MUR, PRTY, SNH, VIAB, VIRT, YELP, and YPF.

Action Plan

The rally off of yesterday’s lows corresponded directly with the stabilization of the bond rates that moved around erratically during the morning session.  That sweet relief rally recovered all the morning losses and even managed to push into positive territory by the close of the day.  However, let’s not mistake a one-day rally as a recovery.  We need bullish price action following through today to confirm the relief rally is truly underway.  Let’s also keep the markets still have to deal with substantial technical damage creating significant resistance levels in the charts.

Futures have traded in the green during the entire overnight session after China took additional steps to stabilize the Yuan.  Volatility is likely to remain high with more than 500 companies reporting earnings today, so prepare for the challenging price action to continue.  As of now, I’m expecting the relief rally to continue, but we must all be on our toes for the possibility of sharp intra-day reversals particularly if bonds rates experience any aftershocks.  Plan your risk carefully.

Trade Wisely,

Doug

It’s always nice after such a strong sell-off when a relief rally begins.  However, with so much technical damage to the charts, I would be carefully finding too much comfort in the rally.  Trader’s should stay vigilant watching for clues of potential price failures at or near price resistance levels and key moving averages.  We should also be on guard for the possibility of overnight reversals as we plan our risk forward.  There can be an opportunity in high volatility times for experienced day-traders, but the path ahead for swing and position traders could be very challenging.

Asian markets closed mixed but mostly lower as China followed-through stabilizing the Yuan at a level slightly lower than expected.  European markets are embracing the calming of the currency fluctuations with their indexes seeing green across the board.  The early evening futures bearish reversed during the night now suggesting a modestly bullish open ahead of a very busy day of earnings reports that may prove to support the relief rally or bring back the bears is the result disappoint.  Plan your risk carefully in this fragile market environment.

On the Calendar

We have another very busy day on the Earnings Calendar with over 430 companies reporting quarterly results.  Among the notable are, LYFT, STMP, DDD, UHAL, AIG, CVNA, CTL, CDE, CVS, FOXA, HL, LAMR, LBYTA, LL, NRG, OMI, PAAS, DOC, RYN, RCII, SFLY, SWKS, TEVA, TRIP, UPWK, and VER.

Action Plan

During the early evening, futures were moving lower after some disappointing earnings results from DIS.  However, things began to improve after the Asian markets opened, and China followed through stabilizing the Yuan.  As a result of the escalating trade war tensions, Morgan Stanley is the first to lower earnings expectations for the next 2-years.  It would seem in the eyes of Morgan Stanley the trade war uncertainty is here to stay.

Although the relief rally that began yesterday appears to be following through with more bullishness ahead to the open, I’m not sure we can gain much comfort in the move due to the tremendous technical damage in the charts.  As the indexes try to recover, we must stay on our toes watching for clues of potential lower high failures at or near price resistance levels or key moving averages.  The huge number of earnings reports, yet this week could help the price recover, but it could also trigger the next wave of selling should the results disappoint.  The high volatility can provide opportunities for adept day-traders; however, swing and position traders are likely to find the price action very challenging.  Remember trading every day is not a requirement, and Cash is a position often underutilized in times of market turmoil such as this.

Trade Wisely,

Doug

In the early evening, it looked like we could be in for a very nasty day after the US Commerce Dept. officially labeled China, a currency manipulator.  US Future plunged more than 600 points as it appeared the Trade War had devolved into a very dangerous currency war.  Luckily cooler heads prevailed as China finally took steps to stabilize the Yuan during the night and lifting the US Futures into positive territory.  With 400 companies reporting earnings today and market emotions at a fevered pitch, we should prepare for very the challenging price volatility to continue.

Overnight Asian markets saw red across the board at the close though they recovered substantially from early session lows.  European markets have turned modestly bullish this morning in reaction to the stabilized Yuan slightly eased trade war tensions.  Ahead a big day of earnings reports, the US Futures point to a bullish open, with the Dow currently suggesting a gap up near 200 points at the open.  With such wild volatility, we should not rule out the possibility of a pop and drop pattern, so stay on your toes and remain focused on price action for clues.  Anything is possible when emotions are so high.

On the Calendar

We have a big day on the Tuesday earnings calendar with 400 companies set to report results.  Some of the notables include ANDE, AINV, WT, ADM, BDX, APRN, CRCM, DIS, DISCA, DUK, ENR, STAY, FLT, FTR, HST, HUBS, NDLS, NUS, OIH, PBI, PAA, RHP, SSTK, SWN, VOYA, WYNN & ZAGG.

Action Plan

There was a lot of futures turmoil after the bell yesterday when the US Commerce Department officially labeled China, a currency manipulator after devaluing the Yuan.  At one point the Dow Futures indicated a gap down of more than 650 points during the early evening as it appeared the trade war had evolved into a very dangerous currency war.  Fortunately, during the night, China took measures to stabilize its currency, and the US Futures breathed a sigh of relief not only recovering the losses but moving back into the green.  Whew, that could have been ugly!

As I write this, the US Futures are pointing to a bullish gap up around 200 points ahead of a huge day of earnings reports.  Although I think the odds of testing the overnight futures lows have declined significantly over the last few hours, we can’t completely rule out the possibility considering the harsh volatility the market is currently experiencing.  Emotions are high, so prepare for challenging price volatility fueled by news and earnings reports to test the metal of even the most experienced traders.

Trade Wisely,

Doug

The Chinese Yuan declined sharply against the dollar as Asian markets experienced steep declines as markets continue to react to the threat of additional tariffs and a trade war that looks tp persist well into the future.  European markets are also seeing red across the board this morning as traders and investors react to mounting trade tensions.  After a grizzly weekend of senseless shootings, the US Futures are in a very bearish mood this morning that could open the Dow more than 300 points lower.

After two straight months of bullish price action, the steep selloff comes as quite a shock wiping out nearly have of those gains in just 4-days. Unfortunately, along with the selling comes substantial technical damage with the DIA, SPY, and QQQ gapping below their 50-day averages this morning.  With more than 1500 companies reporting earnings this week and the VIX rising sharply, we should expect and plan for very challenging and volatile price action to continue.  Protect your capital and remember during times like this that cash is a position often underutilized.

On the Calendar

On the Morning Earnings Calendar, we have more than 230 companies reporting results.  Notable reports include TTWO, APLE, CZR, LIN, L, MAR, MOS, O, and SHAK.

Action Plan

We are looking at a punishing market open this morning as markets continue to react to the threat of additional tariffs and a grizzly weekend of senseless shootings.  The Chinese Yuan declined sharply against the US dollar overnight as Asian markets closed with substantial losses overnight.  The steep rally that began in early June will give back about 50% of Dow gains on the 4^th day of declines as the market gaps down at the open.

Substantial technical damage is occurring in the charts with the DIA, SPT, and QQQ gapping below their respective 50-day averages.  Adding insult to injury, it looks like the IWM will open below its 200-day average.  In my opinion, this correction was overdue, and the harsh reaction is partially due to the complacency seen in the VIX.  However, that doesn’t make this sudden pullback any less painful or palatable to trader and investors caught in the turmoil.  With a huge number of earnings reports this week, we should expect volatility to remain high and challenging price action to continue.  Prepare for a very bumpy week ahead.

Trade Wisely,

Doug