The Bull’s showed resilience defending price support.

Defending price support with the Bears on the attack was important yesterday but price resistance continues to pose a problem.  I have to admit that the Bulls displayed much more resilience than I was expecting.  Great job Bulls!  As a result, I want to be very bullish, but the fact remains that both the DIA and the SPY remain in a sideways consolidation.  Don’t get me wrong I’m very grateful the Bulls defended the borders but they still seem to lack the energy to breakout.  Futures are suggesting the Bears may be trying to regroup to mount another offensive this morning.  Can the Bulls continue to hold?

On the Calendar

The Economic Calendar kicked off early today with a Fed speaker at 6:25 AM Eastern.  The good news is that’s the only Fed member with something to say today!   Is it just me, or does anyone else miss the days when the Fed was a lot more tight lipped?  LOL.  The weekly Jobless Claims numbers are a 8:30 AM as is the biggest number of the day Producer Price Index.  On the earnings front, we will receive reports from over 300 companies today.  The earnings calendar finally begins to lighten up next week and slowly wind down this quarter’s reports.

Action Plan

If the Bulls continue to show resilience defending support as well as they did yesterday, we will be in good shape.  However, the Bears are attacking again this morning with the futures pointing to a lower open.  Currently, hold 13 long positions I think is necessary to exercise a little caution on entering new trades.  At the close of yesterday, all 13 positions were winners, so my top priority will be managing current trades and possibly taking some profits.

With the majority of the open positions being tech related I will keep a close eye on the QQQ.   If there is a weakness there, I will be more inclined to start banking gains and reduce risk.  I suggest everyone tighten up your stops.  Remember trades can happen much faster than it’s possible to send out alerts.  If you’re happy with the gain, take it.  You can never go broke taking a profit!

Trade Wisely,

Doug

Bearish engulfing price action at resistance.  Bears gain the advantage.

The bearish engulfing candles left behind yesterday on the DIA and SPY put the Bears in temporary control of market direction.  The fact that they took control right a price resistance is also very important as well as concerning.  Clearly daily supports are still in place, but we should expect at a minimum a strong challenge.  There is no need to panic but caution flags and warning lights are flashing.  This bearish attack could be short lived but it could also be the first warning sign that this bull run has come to and end.  The Bulls will certainly fight back but we should never ignore the seriousness of a potential failure at resistance.  Plan accordingly.

On the Calendar

The Economic Calendar starts to heat up today with some important reports through weeks end.  Import and Export Prices kick things off at 8:30 AM Eastern time followed by the Petroleum Status Report at 10:30 AM.  This afternoon at 2 PM the Treasury Budget will be released.  Of these reports, the most likely to move the market is the Oil Status Report.  Also noteworthy are the two mid-day Fed speakers.  The Earnings Calendar has over 350 companies reporting today.

Action Plan

The last couple days I have been warning about the dangers of getting overly long a market that’s struggling to break resistance.  Yesterday afternoon the Bears began to overwhelm the Bulls breaking intraday support levels.  This morning the Bears continue their offensive with futures number suggesting the Dow will gap down about 50 points.

Watch your positions closely this morning and be prepared to take profit or exit trades to stop losses if necessary.  The SPY and the QQQ seem to be less affected, but if the DIA continues to push lower, it certainly has the power to pull the other indexes down.  So at least for this morning, the plan will be account management, possible profit taking, and capital preservation.  Keep in mind that daily supports are still in place, so there is no reason to panic, but we also don’t want to bury our heads in the sand.  Always be prepared to act.

Trade wisely,

Doug

The market is pounding on the price resistance door.  Will it open?

With the DIA and SPY pounding on the price resistance door we are left with a question.  Do the Bull have the energy to push it open?  The QQQ has certainly been doing its part resuming market leadership capturing new highs.  Still, the broad market seems lethargic and uninspired.  Futures are currently pointing to a higher open though not enough just yet to overwhelm the Bears.  Perhaps as the morning rolls along, the huge number of earnings reports will provide the spark necessary to break through.

The longer the Bulls pound against the door unable to open it the Bears will become emboldened.  Keep an eye out for clues of failure if this level of resistance proves too difficult for the Bulls to breach.  As of now, I’m sticking with Team Bulls, but I’m prepared to switch sides quickly if the momentum shifts.

On the Calendar

Another light day on the Economic Calendar has the JOLTS report at 10 AM Eastern and 3 Fed speakers.  To move the market the JOLTS number which tracks monthly job openings would require a huge surprise.  No likely!  Of course, the Fed speakers always have a chance of moving the market if they interject an unexpected comment on rates.  Over 400 companies report earnings today with NVDA being one of the most watched.  NVDA number will not be out until after the bell this afternoon.

Action Plan

After a disappointing start yesterday the Bulls managed to stage a small choppy rally.  The DIA and SPY closed just slightly bullish, the IWM recovered from early lows, but the QQQ stretched out to a new all-time closing high.  Although bullish, both the SPY and the DIA remain under price resistance.  Both need a burst of energy to break through to new highs.  However, this also the area we have to watch for clues of failure if the Bears gain an advantage.

Counting both stock and options positions, I’m currently holding ten open swing trades.  Considering most of the market is still under the influence of resistance It’s about as aggressive as I’m willing to be at the moment.  It might be wise for some to consider taking profits on current positions before entering new trades.

Trade Wisely,

Doug