Bulls Seem Ready to Run Again

Markets held their ground Tuesday, off the absolute highs but not falling far.  The SPY closed down 0.20%, the DIA down 0.49%, and the QQQ down only 0.04%.  T2122 has fallen back to the mid-range at 57.57 and the VXX gained only a fraction to close at a still historically-low 13.43.

On the news front, the CDC confirmed the first case of coronavirus had made its way from China to the US in the short time it has even had a name (about a week).  In other news, BA took another beating as it said it does not expect regulators to allow the 737 Max to fly again until at least mid-2020.  Finally, the impeachment trial began with wrangling over trial rules. It seems the Republicans are still leaning toward just a summary presentation of House findings and then a vote to acquit. They blocked a Democrat call to subpoena documents the White House refused to give the House and both sides are arguing over witnesses.

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The interesting news out of Davos was almost all made by President Trump, as is his want.  While the need to adapt to Climate Change and the need to work together globally was the theme (and near-universal opinion of attendees), President Trump remains vocally opposed on both counts.  Once again, he pooh-poohed climate change as not proven and unneeded drag on the economy. He also urged all countries to employ trade policies that are in their own countries’ internal best interests.  He also attacked the Fed again (saying the economy would be at a 4% growth rate except for the Fed dragging it down). And Finally, he announced an attempt to reform the WTO (which he neutered last year by removing a quorum among the Trade Dispute Judges).

Wednesday’s major economic news is limited to Dec. Home Sales (10 am). However, there will be a number of earnings reports, with APH, GD, JNJ, NSC, NTRS, TEL, and TXT all reporting before the open.  After the close ASML, CCI, DFS, FFIV, KMI, RFJ, SLG, and VAR report.

Overnight, Asian markets were green across the board.  In Europe, markets are mixed, but mostly higher at this point in the day.  As of 7:45 am, once again U.S. futures are pointing to a hefty gap higher of between four-tenths and a two-thirds of a percent.

It appears the bulls are back for more this morning. The generally good earnings and lack of major bearish news seems to have them ready for another leg up this morning. Just remember that we are still extended. For example, the Put-Call Ratio is at it's lowest mark in years. So, caution is warranted, but don't fight the trend. Look for long opportunities near support but don’t chase. Keep taking profits on a regular basis, moving your stops to protect yourself, and wait for the trade to come to you.   

Ed

Swing Trade Ideas for your consideratoin and watchlist: LW, GRMN, EYE, OSTK, TUP, VG, URI, MHK, MGM, MYL, MU. Trade smart, take profits along the way and trade your plan. Also, don't forget to check for upcoming earnings. The stocks/etfs we mention and talk about in the trading room are not recommendations to buy or sell.

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