Santa held Hostage?

During the evening the Congress passed a continuing resolution that prevents a government shut down.  However, their action only extended the battle for 2-weeks.  Now the question is will the hoped-for Santa Claus Rally be held, hostage by Congress?  Santa held hostage, shame on you Congress!  My feeble attempt at humor is simply point out that the market will likely remain sensitive to the spin out of Washington D.C.  Of course, the bulls could find their inspiration in the Employment situation number to move higher, but the governmental pressure will be ever-present.  Also, weighing on the mind of the market is the upcoming FOMC meeting.  As for me, I will continue to focus on price action and continue to trade with the trend.  However, I may trade smaller than normal positions due to the uncertainty of the new cycle.

On the Calendar

We begin the Friday Economic Calendar with the very important Employment Situation report at 8:30 AM Eastern.  Consensus for November expects a strong showing between 184,000 and 190,000.  The overall rate is seen holding at 4.1% with hourly earnings increasing 0.3%.  At 10:00 AM we get a reading on Consumer Sentiment which is expected to tick higher to 98.8 vs. 98.5 last month.  Wholesale Trade numbers are also at 10:00 AM with the oil rig count at 1:00 PM.  Neither of which are likely to move the market.

On the Earnings Calendar, we only have 8-companies reporting.  Looking through the list, I would not expect any of today’s reports to affect the overall market.

Action Plan

Yesterday’s modest bounce held some key support levels and provided some much need relief.  There are a lot of charts showing bullish patterns.  Now, all we need is a little more volume to build some momentum, to continue the trend.  Currently, the Dow Futures are suggesting a positive option on the news from capitol hill.  During the evening Congress passed a continuing resolution that avoids a Saturday shutdown of the government.  Unfortunately, they only kick the can down the road two weeks.  That means the budget battle will continue and the market will remain sensitive to the news.  Perhaps the market will get a shot in the arm after the Employment Situation report to reinforce and inspire the bulls higher.

Trade Wisely,

Doug

Boredom

During my years as a struggling trader, boring market periods in the market were very costly.  If I was sitting in front of my computer, I felt I should be trading.  I would run every scan I had ever thought of rushing to find something to trade never once considering the overall market condition.  Boredom is as dangerous to a trader as the emotions of fear and greed.  It would cause me to force trades or talk myself into positions I had no good reason to buy.  Learning to stand aside when I had no edge was a very hard lesson to learn, and it cost me more capital than I care to admit.  Always remember that you don’t have to trade every day to be successful.  In fact, trading less and only when you have an edge produces better returns and a higher win/loss ratio.

On the Calendar

Thursday’s Economic Calendar is a full one, but there is only report with any concern for moving the market.  At 8:30 AM is the Weekly Jobless Claims which is expected to remain near historic lows with even Puerto Rico numbers declining.  There is a Fed Speaker at 8:30 as well but after that several non-market-moving reports.

On the Earnings Calendar, we have about 45 companies reporting their results today.  Continue to build the habit of checking for reports on the stocks you currently own and those you plan to purchase.  Failure to do can turn out to be a painful experience.

Action Plan

Yesterday again experience a very light day of selling in the DIA and IWM while the SPY and QQQ found some buyers at support.  Overall the volume was light, and price action continues to be choppy.  Unless we have a news event shake us loose, I think we should expect more choppiness today.  Keep in mind the market could be waiting for the Employment Situation number on Friday or even the FOMC next week for inspiration.  Another potential market driver is the pending government shutdown at midnight Saturday if Congress fails to get it’s act together.

I am continuing to prepare for new trades if we see some buyers begin to step in at support levels.  However, I’m in no rush and will wait for buy signals to appear before adding risk.

Trade Wisley,

Doug

Where is Santa?

With the last 3-days of selling, traders are starting to wonder, Where is Santa?  Gloom and doomers have been predicting the demise of the 2017 bull run all year.  Now having strung together the first 3-day selling streak since August they are out in force predicting the market top has happened.  Could they be right?  Of course, even a broken watch is right twice a day.  Before diving headlong into a pit of despair take a minute to examine the charts.  The DIA and the SPY are still trending up!  The QQQ’s are suggesting caution, and the IWM is holding a significant support.  Also, take notice that there has been no panic selling and the VIX is not registering fear.  Historically the so-called Santa Rally appears 7 to 10 days after the beginning of December.  Stay focused on price it will provide us the answers.

On the Calendar

The Economic Calendar for Wednesday gets going at 8:15 AM Eastern with the ADP Employment Report.  The ADP has had a rough year widely missing the actual number over and over.  However, ADP was spot on in October with it 235,000 number.  ADP is expecting a 186,000 print for November.  Productivity and Costs will report at 8:30 AM.  Forecasters see nonfarm productivity rising 3.2% with labor cost increasing 0.3%.  At 10:30 we will get the EIA Petroleum Status report which has recently seen supplies declining helping to support oil prices.

We have 50 companies stepping up report earnings results today.  A few of the notable reports before the bell are AEO, FRED, HRB & KLXI.  After the market closes hear from AVGO, LULU, TLRD & VRNT.

Action Plan

Even though the bulls made an effort to gap the market higher at the open yesterday, ultimately profit-taking ruled the day.  There was no panic just a steady stream of slow, deeply controlled selling.  Yesterday the SPY registered the first 3-day selling streak since August.  So does that mean the market top is in and the 2017 bull run has finally come to an end?  I wouldn’t bet on that just yet because the overall trend in the daily SPY and DIA charts still show an up-trend.  The QQQ’s and the IWM certainly suggest caution is warranted but at this time no clear signals of stockholders running for the doors.

The VIX barely moved yesterday and the slow, grinding selling yesterday offered no hints of panic.  If Congress can actually complete one project this year (tax reform) and prevent a government closure midnight Saturday, then Santa might return!  Set aside your bias and focus on the price action for clues.  Listen to the market and avoid trying to predict.

Trade Wisley,

Doug