The Trend is Strong

Just when you think the market is about to take a breath and rest the Bulls step up and drive us even higher.  Once again new record highs ring out inspiring more and more buyers to enter the market.  With earnings session underway anything is possible, but so far they have been coming in strong that could continue fueling the Bulls to push even higher. The trend is strong and clearly very bullish.

Don’t try and fight or just might find yourself under the hooves of charging bulls.  There was a time in my trading career when I believed I had gained so much knowledge and skill I could predict the market.  I would find myself often trying to fight the market trend allowing my bias to control my decisions.  Long story short, my accounts suffered tremendous damage as a result.  Whether it seems rational or not work within the trend as long as it continues.

On the Calendar

The Economic Calendar starts off with Import and Export Prices at 8:30 AM Eastern.  Conseensus sees a 0.5% gain vs. 0.5% percent last month.  At 9:15 AM is the most important number of the day, Industrial Production.  Forestasters are calling for a 0.4% September gain in production numbers.  Then at 10:0 AM the Housing Market Index is expected to hold unchanged at 64.  Then at 2:00 PM is the Treasury Budget wihich is calling for a 3.0 billion surplus.  Then at 4:00 PM is the Treasury International Capital which tracks financial instrments in and our of the the country.

The Earnings Calendar has bumped up to more than 50 companies expected to report results today.  JNJ, IBM, GS, PGR, CREE, HOG, MS are some of the notables reporting.  NFLX reported good results after the close yesterday.

Action Plan

I sometimes feel a little like Bull Murray in “Goundhog Day,” when everyday I repeat the market has once again set new records.  As is case for yesterday with the DIA, SPY and QQQ’s all closing at new record highs once again.  The IWM lagged behind choosing instead to remain in a tight consolidation range.  The VIX continues to hover just above record lows and hanging on to its sub ten reading.

Although this run seems to be a bit long in the tooth, the Bears seem to be no where in sight.  At this time there also seems to be no Fear of their return at the moment.  Common sense keeps telling me this can’t go on forever.  However betting against or standing aside in a wildly bullish market such as this would be a mistake.  If earnings begin to roll in showing that most companies can support these lofty price levels, then the trend up could continue much longer.  Set aside your bias and trade the charts in front of your with a focus on price action.

Trade Wisely,

Doug

The Bulls maintain market control.

Another weekend passes without a major incident effecting the market.  The Senate takes up tax reform, and earnings session begins to heat up this week.  Both could provide significant price action as well as increased volatility.  The futures are pointing to a slightly higher open today, as the Bulls maintain market control.

The Yellen speech on Sunday seemed to raise the likelihood of an interest rate increase in December.  Normally that is seen as a bearish signal, but lets keep some perspective and realize that would only bring the rate up to 1.5%.  If the market can’t handle a 1.5% interest rate, we will have far bigger problems in the economy.

On the Calendar

We begin a new week on the the Economic Calendar with the Empire State Mfg. Survey at 8:30 AM Eastern.  New orders are at and 8-year highs while delivery delay are at record levels.  This one of the first signals that an economy may start overheating.  Forecasters see the October number coming in at 20.5 vs. 25.2 last month.  The Treasury Budget is a 2:00 PM today but not expected to move the market.  There is on Fed Speaker late this evening and other than that just a few bond auction to round out the calendar.

This week the Earnings Calendar begins to ramp up with potential market moving reports.  It’s every traders responsibility to check reporting dates of the stock you own or are thing about buying.  Failure to do so can result in a very painful lession.  There are 27 reports today with the most notable report coming from NFLX after the bell.  The first of the so called FANG stocks could certanially have an overall market effect.  Time to prepare for higher volitality.

Action Plan

The Bulls continue to show incredible resielence, and there seems to be no fear of profit taking or retracement at the moment.  It will be interesting to see how stocks respond as earnings report begin to roll out.  Will earnings support these price levels?  Analysts say yes with an 11% growth expected overall this year.  Only time will tell.

Earnings Session normally kicks up the volitality.  Large market gaps ups or gap down open become much more likely so plan your trades accordingly.  As of now, the overall market trend continues to be up so I will continue looking for long trades to move with the trend.  The VIX does give me a little pause with it showing so much complaicency which should keep us focused on price action for clues of change.  At times like this, it’s important to trade what you see in the chart.  It’s so easy to missout on nice moves if you get caught up in your own pearsonal bias of what you believe the market should or should not be doing.  Always remeember that the market can remain irrational much longer that you stay liquid trying to fight it.

Trade Wisely,

Doug

Should I stay or should I go?

An old song lyric seems to describe my thoughts this morning.  “Should I stay or should I go,” by The Clash.  As most of you know, I consider Friday to be Profit Day as we head into the uncertainty of a weekend.  Even though we saw a tiny bit of profit taking yesterday in the overall market, our current trades mostly managed to move up.  Yes, the weekend is uncertain, but as of now, the overall market is still very strong with the future pointing to a higher open.  So what’s a guy to do?  Focus on price action and let it lead the way!  If I see the bears stepping in, I may begin to trim risk and put some gains in the bank.  If the bulls remain strong, I may lean toward letting them ride because of the comfortable gains we currently hold.  Of course if your nervous or would sleep better by reducing some risk than by all means do so!  You can’t go broke taking a profit, and you can always reenter on Monday.  What ever you decide focus on price and remember Price is King!

On the Calendar

There’s no rest for the weary on this Friday’s Economic Calendar having the most important reports of the week.  It all begins before the market opens at 8:30 AM Eastern with the Consumer Price Index followed directly by Retail Sales numbers.  Forecasters see a 0.2% in the core number and 0.6% increase in energy.  The year-on-year number is expected to rise, to 2.3%.  Hurricane replacement sales and higher gasoline prices are expected to bloat the Retail Sales number today.  Consensus see’s a rare 1.8% as a result.  Of lesser importance, Business Inventories and Consumer Sentiment are both at 10:00 AM followed by the Treasury Budget at 2:00 PM.  We have 3 Fed Speakers today, and Janet Yellen speaks on Sunday.

On the Earnings Calendar, we have 20 companies expected to report today.  Especially notable will be BAC and WFC which both report before the bell.  PNC and JBHT also report before the market opens today.

Action Plan

Yesterday proved to be another record high intraday on the DIA, SPY, and QQQ’s but it was unable to hold on to that level into the close.  Although some selling occurred, it was very light and choppy.  As I write this, the Futures are pointing to a slightly higher open.  BAC has already reported beating estimates by 3 cents a share.

Because it Friday I will be focused on profits but because I’m pretty comfortable with the current positions a hold over the weekend is possible.  Of course, price action, as always will be the key decision maker.

Trade Wisely,

Doug