Back in the Saddle
Good morning friends. It’s good to be back in the saddle. Las Vegas is always fun and meeting with fellow traders at the Expo is a blast. However, as Dorthy says in Wizard to Oz, “There is no place like home.”
The Bulls remain in control, and the overall trends are still very bullish. I will continue trading long, and with the overall trend, however, I think it would be wise to stay laser-focused on price action. As strong as this bull run is we don’t want to become complacent. One method to combat complacency is taking profits consistently into market strength. Doing so will relieve the pressure on a winning trade. There is nothing like taking profits to the bank to remove the emotions of fear and greed.
On the Calendar
There are several items on the Economic Calendar such as bond auctions but nothing that is expected to move the market. At 12:10 PM there is a Fed Speaker to be aware of but again unlikely to move the market.
On the Earnings Calendar, there are just over 200 companies expected to report today. As the last really big week for this earnings season we and expect about 1500 reports so stay on your toes for another wild week.
Action Plan
With the DIA, SPY, and QQQ all setting new closing records on Friday the trend higher is still absolutely intact and bullish at this time. The poor IWM just can’t seem to get with the program join in with the rally. As of now it continues to consolidate and would have to be considered the weakest of the indexes even though sellers have been unable to take control.
Futures this morning are mixed as I write this, but of course, with so many pre-market earnings reports anything is possible. The bullishness of this rally has been remarkable, and I know many traders think these prices are unsustainable. While I agree this bullishness seems irrational, it would be unwise to anticipate a market correction. If you take a look at the tech bubble of the late 90’s you can see that irrational market behavior can last several years. Please understand I am not suggesting this rally will last for years, I’m simply pointing out it has happened before. Stay with the trend until the trend ends.
Trade Wisely,
Doug
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EAT – Bullish Over $32.00
EAT (Brinker International), Bullish over $32.00 and the Bullish Morning Star on the 3-day chart. The EAT chart has constructed a strong bottom with very good price action coming into a Rounded Bottom Breakout pattern. Understanding what you want out of a trade can help when setting up a trading plan. Price is King!
►EAT – Train Your Eyes, Can You Find the Following?
RBB pattern Doji Engulf pattern •Bullish rectangle• Bullish Morning Star • Doji continuation pattern • Hint, look at the 1 -2- and 3-day charts.
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► Eyes On The Market
Last week the SPY gave no clues that the Bears were starting to hunt, and for the open today, I still don’t see that. Friday price closed with a Morning Star pattern, and today we need to see confirmation. The open today will be a little soft but remember it’s the complete construction of the candle that we analyze. To stay away from the pain of the noise following fast, medium and medium + is very helpful such as the 3-8-17 or something close to that.
A close below $257.00 on the SPY would warrant a test of the October low.
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Investing and Trading involves significant financial risk and is not suitable for everyone. No communication from Hit and Run Candlesticks Inc. is financial or trading advice. All information is intended for Educational Purposes Only. Terms of Service.
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Do you have an edge?
Will we get the typical pre-FOMC choppy price action or will the 380 earnings reports break the mold? Perhaps the bigger question is, Do you have an edge? On the positive side, the market is trending higher, and so far earnings have been overall strong. On the other side, the market appears overextended, and the uncertainty of earnings reports and FOMC looms.
During times like this, I normally slow my trading activity. I try to focus on my current portfolio first. I tend to slow to add trades during times of uncertainty. I’m only interested in low-risk entries to keep potential losses as small as possible. I try not to chase the morning pops and drops. I choose instead to wait 15 to 30 minutes before looking for new risk. Always remember quality is more important than quantity and prepare for anything.
On the Calendar
On the Economic Calendar, this last day of October begins the FOMC 2-day meeting kicks off. Their announcement regarding interest rates will occur tomorrow at 2:00 PM Eastern. At 8:30 AM today we have the Employment Cost Index is expected to surge 0.7% today. The 9:00 AM reading of the S&P CoreLogic Case-Shiller which is expected to rise 0.6% bringing the year-on-year rate up to 6.0%. Then at 9:45 AM the Chicago PMI is expected to slow just slightly to 62.0 according to forecasters, which is still very strong. The 10:00 AM Consumer Confidence is seen rising to 121.0 vs. September’s 119.8 print.
The Earnings Calendar ramps up today with more than 260 reports. We had better get used to it because the number grows to more than 380 on Wed. and over 600 on Thursday. Prepare, prepare, prepare.
Action Plan
Political turmoil, earnings, and FOMC. Oh, My! With so much on the proverbal market plate, the next few days the uncertainty alone is likely to give traders indigestion. There are a lot of good charts, but because of all the news and the potential violent reactions can you still find an Edge? Tough call.
The good news is that the market is still wildly bullish even considering yesterdays little pullback. If earnings continue to come out positive, then there is every reason to believe that the market will continue its trend. Futures are pointing to a bullish open, however, keep in mind that normally we get choppy price action as the market waits on the FOMC. The problem is, I’m not sure normal applies here! Anything is possible so plan accordingly.
Trade Wisely,
Doug
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MU – Bullish Over $41.95
MU (Micron Technology), Bullish over $41.95 The MU Chart saw a little profit taking in September then the Bulls came back in with a Bull Kicker. A small run accrued followed by bullish consolidation. The past 3 bars have formed a bullish Morning Star closing back over the T-Line.
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►Train Your Eyes, Can You Find the Following?
34-Rising Trend • Bull Kicker •Bullish rectangle• Bullish Morning Star • 24 day V-Stop Run.
Good Trading – Hit and Run Candlesticks
► Ticker Update (SEDG)
You could have profited more than 142% or about $1919, with 100 shares when we posted to our members on February 14. If you are interested in how to trade charts like this, Rick Saddler founder of Hit and Run Candlesticks offers private recorded coaching • Coaching With Rick you can also learn this trading technique in our membership. – Get Started
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► Eyes On The Market
The SPY closed yesterday with a Doji inside day that suggests indecision. The T-line trend remains bullish as well as the J-Hook continuation chart pattern. On the 2-day chart, the price has closed above the V-Stops and the upper T-Line Band for the past 22 days. I am hearing about a few traders starting to short, be very careful shorting when the market is such a Bull.
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Investing and Trading involves significant financial risk and is not suitable for everyone. No communication from Hit and Run Candlesticks Inc. is financial or trading advice. All information is intended for Educational Purposes Only. Terms of Service.
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CSTM – Bullish Above 11.45
CSTN (Constellium NV), The CSTM Chart has consolidated for the past couple of months and is now Bullish above $11.45. Last week CSTM broke out and closed above a double top after finding support from the 34-EMA and 50-SMA. On a 2-Day chart of CSTM, you can see the Ascending Triangle and the Bullish Engulf.
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►Train Your Eyes
CSTM • Trend • Ascending Triangle •Rising 34-EMA • Bullish Engulf • (Hit: Look at a 2-day chart)
Good Trading – Hit and Run Candlesticks
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► Eyes On The Market
Friday ended on a Bullish note with the SPY printing a Bullish J-Hook Continuation pattern. (The 2-Day chart printed a Bullish Morning Star). Price vs-Line and T-Line Bands are bullish, price vs. price is bullish, price vs. V-Stop is bullish. I would say the market is bullish. Below $255.60 or about the T-Line would bring the VIX up a little. The VIX closed below the Lower T-Line Band and below the VStop but support and bottom construction are still evident.
Rick’s trade ideas for the day – MEMBERS ONLY
30-Day Trial • Monthly • Quarterly • Semi-Annual • Annual
Investing and Trading involves significant financial risk and is not suitable for everyone. No communication from Hit and Run Candlesticks Inc. is financial or trading advice. All information is intended for Educational Purposes Only. Terms of Service.
Rick Saddler is not a licensed financial adviser nor does he offer trade recommendations or advice to anyone except for the trading desk of Hit and Run Candlesticks Inc.
Remain Objective
With such a strong bull run underway it can be difficult to remain objective. There are those with a wildly bullish market bias and those expecting an imminent collapse as a result of the being overbought. The financial news only serves to fan the flames of both sides of this drama. Toss in turbulent government and about 1500 earnings reports and you have the makings for a very wild week. So whats a trader to do?
What works for me is to turn off all the noise, focus on price action, my trading rules, goals and discipline. Price is King. I can only make money if I’m on the right side a price move. What I think or feel should happen is completely irrelevant and only clouds my view of actual price action. Turn off the noise, set your bias aside and trade the chart.
On the Calendar
The Economic Calendar begins with a potential market-moving report at 8:30 AM Eastern. The Personal Income and Outlays core number is expected to rise by only 0.1% September with the year over year rate stuck at 1.3%. However, personal income is expecting an increase of 0.4%, and consumer spending is expected to jump 0.9% as a result of post-hurricane auto replacements. At 10:30 AM is the Dalla Fed Mfg. Survey is not expected to move the market with a strong number of 21.3 according to forecasters.
The Earnings Calendar will be front and center this week with more than 1500 companies reporting. Today we get it kicked off with just over 180 posting results. I highly recommend taking the time to make sure of the reporting dates of companies you hold or those you are considering as new purchases.
Action Plan
Last week ended with a bang due to some great big tech earnings reports. Both the SPY and the QQQ closed at new record highs while DIA and IWM lagged slightly behind. Currently, futures are pointing to lower open as I write this but with so many earnings reports coming out that could easily change. There is widespread speculation today of possible arrests from the Russian investigations. That, of course, could temper the bulls enthusiasm as it could slow or even stop the tax plan.
As for me, I will stay the course, trading with the trend which is bullish but extended. With such a huge number of companies reporting this week anything is possible. Don’t be surprised to volatile moves up or down as the market reacts to earnings as well as the news. Fast intraday whips are not out of the question so avoid chasing and wait for low-risk defensible positions. My suggestion is to turn off the news, avoid the drama and stay focused on the price the action.
Trade wisely,
Doug
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Good morning friends. It’s good to be back in the saddle. Las Vegas is always fun and meeting with fellow traders at the Expo is a blast. However, as Dorthy says in Wizard to Oz, “There is no place like home.”
