Bullish price action warrants cautious optimism at resistance.

The bullish price action and the strong close lifted my optimism of a breakout yesterday afternoon.  Because I am long 12 positions, I obviously have an upside bias, but I must acknowledge the overhead resistance.  Even with the great effort, the Bulls made yesterday resistance still proved to be a stumbling point.  I’m holding out hope that today will be the breakout but I am prepared to capture my gains quickly if resistance proves too strong.

On the Calendar

The Earnings Calendar kicked off early this morning with HD reporting better than expected earnings about 6 AM Eastern time.   Let’s hope the 70 plus other companies do as well and it’s enough energy to break the market out of the current price range.   For now, I will cheer for HD because the DIA needs all the help it can get!

On the Economic Calendar, we have two potentially market-moving reports.  First, off is the Housing Starts number at 8:30 AM Eastern followed by Industrial Production.  Both are important numbers because they directly point to the health of our overall economy.  Growth in both areas would sure help to lift the market out of its recent doldrums.

Action Plan

I am approaching the market with cautious optimism.  The nice showing in the SPY yesterday and its strength into the close inspires the optimism.  The caution comes in the form of resistance that as of yesterday proved to an obstacle the market was unable to overcome.  As a result, I’m happy to be holding a significant number of long positions yet feel the need to manage them closely.  If a failure price pattern were to occur this would be the place to watch for them.  Currently, futures are pointing to a slightly positive open, but a lot can happen over the next couple hours as the market responds to earnings and market reports.  My plan is to stay long, but I will be laser focused on the markets price action and will not hesitate to capture gains if a failure pattern develops.

Trade wisely,

Doug