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News driven Volatility

May 7, 2019 by Doug Campbell

After a nasty gap down followed by an amazing recovery rally, futures are currently pointing to a gap down open of more than 100 points. Volatility is likely to remain high as the drama plays out between the US and China. Asian markets closed mixed overnight and European indexes are red across the board with new 25% tariffs scheduled to go into effect at 12:01 Friday. Tensions are high and according to reports China has walked back most of the major concessions previously made.

Add to that a week chalked full of earnings and the stage is set for considerable volatility the possibility of big overnight gaps making trading in the current environment more like gambling amidst all the turmoil. Day traders will likely have the upper hand and swing traders may find it difficult to impossible to hold on to an edge over the next several days. So far this has been a great year of profits be careful not to give those gains back trying to trade such uncertainty. It may be wise to back off, protecting your capital, and remember you don’t have to trade every day to be a successful trader.

On the Calendar

On the Earnings Calendar we have a very big day with more than 380 companies reporting. Among the notable reports, DDD, ALGN, ABEV, BUD, CHUY, CNX, CROX, DBA, DF, DFRG, EA, EMR, ENR, RACE, IT, HUBS, JAZZ, KGC, LC, LPX, MLCO, MYL, OHI, PZZA, PBR, PBPB, QRVO, SEAS, SRE, RGR, TRIP, WU, & WING.

Action Plan

After a remarkable rebound rally yesterday where traders shrugged off trade war concerns and the escalation of tensions between the US and Iran face another gap down this morning as markets around the world respond lower. Although the Vice Premier is joining the trade negotiation team on Wednesday, China has walked back most of the major concessions made in the 150-page trade deal according to reports. The president as also followed through on his threat setting the 25% tariff increase for 12:01 Friday. I think it’s fair to say the tensions are high and currently relations have taken a big step back.

As I write this US futures are pointing to a gap down of more than 100 in the Dow but that could easily change considerably with so many companies reporting results this morning. The fact volatility is likely to remain quite high over the next several days setting the stage for big gaps and possible overnight reversals. In this kind of condition trading becomes much more like gambling and having any kind of edge for the swing trader is near to impossible. If you do decide to trade it would be wise to keep the positions smaller than normal in light of the volatility and be careful not over trade.

Trade Wisely,

Doug

Weekend Bombshell

May 6, 2019 by Doug Campbell

After a glowing jobs report on Friday the bulls appeared solidly in control but then some nasty weekend bombshells reversing that comfortable Friday feeling into dread and confusion. What a difference a weekend makes! Weekend bombshell number-1 landed when the president announced the plan to raise tariffs against China by 25% this Friday. China is not considering pulling out of the negotiations scheduled on Wednesday.

Weekend Bombshell number-2 landed with Iran behind new rocket attacks in Israel forcing the US to send a Carrier Group and bombers back into the Persian Gulf. If that’s not enough toss in a huge week of earnings reports and we have a recipe for extreme volatility. Currently the futures point a large gap down likely trapping many traders with painful losses at the open that could easily create more selling pressure. Fasten those seat-belts it’s likely going to be a very rough ride today.

On the Calendar

On the Earnings Calendar we have around 225 companies reporting earnings today. Some of the notable reports include AIG, AWR, BHC, CBT, TACO, FRGI, GLUU, HTZ, LBTYA, OXY, PETS, SKT & SYY.

Action Plan

What a difference a weekend can make. We closed on Friday with the bulls in control after a fantastic jobs report with the hope of a forthcoming trade deal this coming Friday. With the President now planning to increase tariffs by 25% on Friday, China may cancel the next round of negotiations scheduled to begin on Wednesday. If that’s not enough Iran is once again acting up and armed conflict with the country may be on the horizon. Toss in a huge day of earnings reports and we have a recipe for some bad tasting volatility.

Asian markets closed sharply lower overnight as you might have expected in the face of escalating trade tensions. European markets are surprisingly mixed with the FTSE modestly higher while the DAX and the CAC are sharply lower. As a result, the Dow Futures are pointing a gap down of nearly 500 points while the NASDAQ futures are looking at a whopping 170 point slide south at the open. There will be more than enough pain to go around this morning but try not to panic. Focus on the price action of the charts and make solid business decisions rather than emotionally based reactions.

Trade Wisley,

Doug

So That’s How It Feels

May 6, 2019 by Rick Saddler

So that’s how it feels when the DOW drops 500 points on a Sunday night. Sure glad we use Fridays as a day to delete a little of our inventory. If a trader has been following a T-Line strategy, you would have been making money from the first pullback after the December low. Overall a gap down this morning should not affect the portfolio that much. Yes, there may be some losses taken today but not to the extent of the gains the past 4-months. My plan of action today is brewed a cup of coffee and pick up a box of donuts on the way to work. Manage the positions I have to take a few profits/losses maybe. But the last thing I am going to do is buy new positions without the proper chart set up or because of desperation. Its times like this that your business decisions are the most important and your trading is your business. $287.00, $284.75, $281.75 will be important price targets for the bears to capture and the bulls to defend.

✅ Profitable trading takes time and education, and a trader must have the proper tools. Hope to see you in the trading room and our educational workshops.

✅ 💰 Because of the pre-market price action, we will wait for the market to settle and the LTA Scanner alerts for trade ideas.👇

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Price Patterns Part # 2

May 5, 2019 by Doug Campbell

In this follow up on price patterns we continue to dig into the common price action patterns and digging through the tons of dirt looking for the gold.

Price Patterns Part #2 Replay

Price Pattern Part #1

May 5, 2019 by Doug Campbell

In this Part #1 calls we dig into the details of some the most repeatable price action patterns and where to find low risk entries.

Price Pattern Part #1 Replay Video

May Jobs Report

May 3, 2019 by Doug Campbell

This morning is all about the May Jobs Report that will be out at 8:30 AM Eastern. Consensus expects a strong report of growth and an unemployment number near historic lows. Consequently the futures are pointing to nice bullish open ahead of the report but of course how the market opens will depend upon the actual results.

Perhaps the number will lift the market out of its 2-day funk and the index once again reach out for new record highs. Only time will tell so stay focused on price action and avoid predicting or getting caught up in the fear of missing out chasing a morning gap into all-time high resistance. Thankfully we have a little break on the earnings calendar today but keep in mind next week is another huge week of reports so plan your risk into the weekend carefully.

On the Calendar

We have a little break on the Earnings Calendar today less than 75 companies reporting. Among the notable reports are D, FCAU, FRAM, SNR, NWL, NBL, TRP & WPC.

Action Plan

Futures are higher this morning ahead of the May Jobs Report with the exception of strong employment growth and an unemployment number near historic lows. Perhaps this is just the catalyst we need to get the market out the funk it has been in the last couple days. We will once again have to be watchful and respect the new resistance levels that recently created. A gap up into all-time resistance could easily set up a pop and drop so be careful chasing with the fear of missing out.

The market has done a good job of ignoring the political drama being played out in Washington thus far but as this drama escalates anything is possible. We have another massive week on earning reports next week so plan your risk carefully as we head into the weekend. Have a great weekend everyone!

Trade Wisely,

Doug

Bearish Engulf Follow-Through?

May 2, 2019 by Rick Saddler

The SPY printed a Bearish Engulf yesterday after making a new high, and the VIX closed over $14.25. I have mentioned in the trading room we should be concerned if the VIX can close over $14.25. Yesterday ended the T-Line Run streak by price closing below the T-Line. If you use the Red/Green alert T-Line you know that is has turned Red, follow through on price will drag the 3-EMA below the T-Line causing a 3×8 trend to start. Price action, trend and support will be very important in the next few days. If we see weakness and follow-through on the bearish engulf I suspect $288.40 could get tested. Of course, the bulls could eat a Snickers Bar and bring us back, a close over $293.40 might bring the die-hard bulls back in the game. Yesterday going into the close we bought IWM puts, Double Top, Evening Star, 2-day Bearish Engulf, Price closing below the T-Line and the 3-SMA following. We also bought VXXB long ending the day with 21%

✅ Profitable trading takes time and education, and a trader must have the proper tools. Hope to see you in the trading room and our educational workshops.

✅ The following are twelve trade ideas I am adding to my watch-list for consideration over the next few days. SDS, TZA, VXXB, QID, DXD, SDS, KEYS, SHOP, ATVI, LABD, SEE, INTU. I will use the LTA Scanner to alert me on these and other setups created.👇

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Data-driven Confusion

May 2, 2019 by Doug Campbell

With yesterday’s close leaving behind bearish engulfing candles and one would expect price to follow-through lower this morning but amidst such data-driven confusion futures are currently suggesting a modestly bullish open. That’s the nature of earnings season. Anything is possible making it near to impossible for the swing trader or position trader to hold on to an edge and becomes much more like a casino.

With more than 400 companies reporting and several possible market-moving economic reports this morning we should expect the data-driven confusion to continue accompanied by its best friend volatility. Keep in mind, we have the big Employment Situation number before the bell on Friday so plan your risk accordingly and be very careful not to over-trade.

On the Calendar

Today will be the biggest day of the week on the earnings calendar with more than 400 companies reporting. Notable reports include, ATVI, WTR, ANET, AVP, BLL, CBS, CI, ED, WW, DISCA, DWDP, DNKN, EXPE, FRT, GILD, HBI, HLF, HFC, IEP, K, MELI, MNST, MUR, NRG, PCG, PLNT, PPL, RMAX, SHAK, DATA, UAA, X, W, & ZTS.

Action Plan

After some significant bearish price action in reaction to the Fed Chairs comments yesterday afternoon leaving behind bearish candle patterns I was expecting at least little follow-through down this morning. However, as I write this the futures are modestly bullish even though Asian markets closed mostly lower and the European markets are currently trading mostly lower. Perhaps its nothing more than high hopes for good results from the more than 400 earnings reports today.

It also makes me wonder if yesterday’s selling got enough traders short to engineer a short squeeze attempt trying to get that new record high in the Dow. In light of the price action we must also consider the possibility of a pop and drop pattern. Have I mentioned I hate earnings! With so much data tossed at the market the fact is anything is possible and swing traders have very little edge in this kind of environment. Stay focused on price action, remain flexible and guard yourself against over-trading.

Trade Wisely,

Doug

MDLZ 38%

May 1, 2019 by Rick Saddler

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Just Another FOMC Day

May 1, 2019 by Rick Saddler

A typical FOMC day is usually dreary until the Fed decisions come out in the early afternoon. Before the FED decision, everyone scramble for a position and changes their mind 2-3 times while sitting on the edge of their seat. Stay calm and have a slice of pie is what I plan to do. It really is pretty simple, if the Fed news is to risky think about cash or nearly cash. If you are comfortable with your positions and they have proper stops sit back and enjoy the pie. And never forget you don’t have to trade every day and never trade out of desperation. THE SPY CHART had a hard morning yesterday thanks to GOOG, but by the end of the day the SPY came back above our T-Line making it 23 days that price has closed above the T-Line, (what a nice run). The bears are always sitting on the edge waiting for a sign to pounce on the bull in a bullish trend, and we will also be alerted with price action and candlesticks formations. Good trading traders!

✅ The following are eleven trade ideas I am adding to my watch-list for consideration over the next few days. CMRE, PG, JNJ, ADSK, ACN, ORCL, UNP, CSX, ECL, BMO, CCK