Brave Face before the mid-term.

This morning the US Futures are trying to put on a brave face before the mid-term election indicating a bullish open.  While the water may seem calm on the surface, there is likely significant turbulence lurking just below.  Futures were lower most of the night so don’t rule out the possible test of the overnight lows during the day.

Combine trade war rhetoric, mid-term election, and nearly 1500 earnings reports this week, and the stage is set for fast price action and high volatility.  After the morning pop wait to see if actual buyers step in to support the gap or if we have a replay of Friday’s pop and drop.  As the old saying goes, patience is a virtue. In the current market condition, patience is also a critical skill every trader should endeavor to master.  Wait for your edge to return!   Remember Santa is coming to town, and his bullish presence historically begins mid to late November.

On the Calendar

On the Earnings Calendar, we have 270 companies reporting earnings today with nearly 1500 by the end of the week.  Make sure your checking earnings dates against all current and proposed positions.

Acton Plan

We have an interesting market setup this morning.  Asian markets were sharply lower across the board overnight with morning trade talk rhetoric coming from the leader.  Across the pond, European markets are currently modestly higher across the board.  US Futures that were pointing to losses most of the night are now pointing to a slightly bullish open but with the so many companies reporting earnings anything is possible.  Although it’s nice to see a little bullishness this morning, I would not rule out the possibility of testing the overnight futures low sometime during the day as high volatility continues to challenge traders.

With the mid-term polls opening up tomorrow it is also possible that after the morning rush the price action could easily stall as we wait for election results.  The market is very sensitive to any trade negotiation news, and we should expect significant price swings on good or bad news reports. I would not rule out another market pullback to test the October lows and high volatility to continue for the next couple of weeks.  However, Santa is coming to town, and the recent pullback could open the door to nice rally later this month and into December.  Be patient, stay focused and protect your capital until you have an edge.

Trade Wisely,

Doug