Las Vegas Money Show

Good morning from the Las Vegas Money Show.  Asian markets closed modestly higher across the board overnight, and the European markets are currently mixed but mostly lower this morning.  Consequently, US futures are pointing to a mixed open as I write this.   Keep in mind that bond and currency markets are closed today in observance of Veterans Day.  As a result, don’t be to surprise if price action becomes light and choppy after the morning rush.

Friday’s 200-point Dow sell-off was a reminder that only is volatility still with us but that there is still a lot of technical damage in the chart still in need of repair.  Although we have a lot of earnings reports today with this being a banking and governmental holiday, they may find it difficult to find the volume necessary to move.  Of course, anything is possible so say focused on price action and disciplined to your rules of engagement.

On the Calendar

Due to the observance of Veterans day bonds and currency trading markets are closed today.  The stock market will be open but with most banks and big instructions closed trading could be limited.  There is a Fed Speaker at 2:30 PM Eastern today but nothing on the calendar that would be expected to move the market.

On the Earnings Calendar

There are just over 150 companies reporting earnings today so make sure you continue to check earnings dates against current holdings.

Action Plan

We may find today a challenging day to trade with bond markets and currency markets closed.  With banks and most of the large trading intuitions closed or lightly staffed we could see choppy price action after the morning rush.  As I write this, the US Futures are pointing to flat to a mixed open.   Don’t be surprised if the volume drops off quickly making it difficult for anything to follow-through.

The one thing that could give the market a little boost it’s the more than 150 companies reporting earnings today.  However, I would be careful of a possible pop and drop and keep in mind all the indexes remain under significant resistance levels.  Having said that we also need to keep an eye out for the beginning of a Santa Claus rally.  Historically mid to late November tends to be the time Santa begins to affect so stay focused.  Remember current volatility will likely continue to make swing trading challenging for many traders.  However, if you stay disciplined to your rules, wait for price action and chart patterns to develop there will be an opportunity for profits.

Trade Wisely,

Doug

Market Bias

Is your market bias robbing you of profits?  As a trading coach, I answer questions almost every day from traders that fail to see the price action clue in the chart due to bias.  Perma-bulls dreaming of a Santa Clause rally, fail to see the possibility of a pullback even after a 2000 point rally in just 8-days.  Perma-bears are just as negligent believing that the market has gone up so much that it has to come down.  Have you ever failed to close position moving strongly against you because, darn it, you have to be right!

We all have, and that’s just one clue that bias is keeping you from success.  Fighting the market is an exercise in futility!  The truth is the market could care less what you think you know about technical analysis, candle patterns or indicators.  Set your bias aside and take the time to study the price action of the chart.  The clues are always there if your bias is not in the way clouding your view of the price action.

On the Calendar

With the majority of earnings reports completed for this quarter, the number of reports will begin to drop significantly.  Today there are 119 companies reporting.

Action Plan

Selling in Asian markets overnight has translated into European market also lower across the board this morning.  As a result, US Futures which held up quite well most of the night began to react very negatively early in the morning.  As I write this, the Dow is indicated to gap sharply lower in response. However, a pullback after such a steep rally is not a surprise, and I expect many traders are already short in anticipation.

At the close yesterday, the VIX was beginning to respond to price support.  The gap down this morning could once again bring some fear into play so plan for volatility to remain elevated.    With the FOMC indicating another rate hike next month and the ongoing uncertainty of China trade negotiations, a substantial market pullback is possible.  Unfortunately, due to the huge rally, finding support could mean a nasty swing lower.  Let’s hope all the market needs is a restful consolidation!  Stay focused on price action and as we head into the weekend, plan your risk carefully.

Trade Wisely,

Doug

Earnings and FOMC

Today is the last really big day of reports this quarter, and with the election behind us, the market is free to react to earnings and the FOMC decision.  Asian markets were mixed but mostly higher overnight, and the European markets are currently flat to mostly lower.  The US Futures are only pointing to a modest gap down this morning but after such a huge rally don’t be surprised to see some profit-taking.

Although I expect volatility to remain high, we could see the price action become rather light and choppy after the morning rush as we wait for the FOMC decision at 2:00 PM Eastern.  Consider the fact that the Dow has gained 2000 points in a straight-up move as you plan your risk heading into the weekend.  The odds are that at some point the market will want to test support levels which are now significantly lower.

On the Calendar

On the earnings calendar, we have nearly 500 companies reporting today.  The number of earnings drop off tomorrow, and there is significantly fewer next week.

Action Plan

With nearly 500 earnings reports and FOMC decision on interest rates today what could possibly go wrong?  LOL  Currently the US Futures are pointing to a modest gap down this morning considering the huge post-election rally.  After recovering more than 2000 Dow points from the low in just eight days, it should not be a surprise if we see some profit-taking and a little market rest in the very near future.  Of course, if a deal can be struck with China anytime soon, that would be a game changer.

Expect considerable volatility today as we wait for the FOMC decision and the market reacts to last really big day of earnings this quarter.  I for one took advantage of the big rally taking profits to the bank.  This morning I’m very light in my account and to be honest I’m currently feeling pretty comfortable with that decision.  The possibility of a pullback or at a minimum is very high, but with the energy and momentum, we saw yesterday If could easily be next week before we see much selling activity.  The spin out of Washington could become very intense over the next few days so plan your rick into the weekend carefully.

Trade Wisely,

Doug