Bulls Still in Control

On a bullish day, some afternoon volatility left the SPY (up 0.20%) and DIA (up 0.39%) closing at all-time highs.  The QQQ had a more indecisive day closing up 0.04%.  The VXX closed down again at 13.62, while the T2122 stepped back just below overbought to 75.07.  It seemed that markets generally took the second day of earnings and the Phase-One Trade Deal with China in stride. 

Speaking of the trade deal, details released Wed. point to China apparently committing to purchase an additional $200bil of good/services over the next two years, meaning roughly an additional $100bil in 2020.  That would be a massive increase over the past where the 2017 base against these gains was about $130bil/yr. total exports to China.  China also pledged to crack down on intellectual property theft. 

Time will tell if these materialize, or how this shakes out globally (purchases from the US, mean less from elsewhere and both have ripple effects), but it certainly appears to be a big win for the US on a headline level.  Of course, on the downside, tariffs on Chinese goods will remain in place for at least another 10 months before review again.

Beyond follow-up on trade deal details, earnings are now front and center for markets. Already this morning, MS posted a massive beat and had pre-markets soaring.

Thursday’s major economic news includes Dec. Retail Sales, Philly Fed Mfg. Index, and new Jobless Claims (all at 8:30 am), Business Inventories (10 am) as well as another Fed speaker.  Beyond MS, other major earnings reports include BK, BLK, CSX, KMI, SWKS, SYF, and TFC.

Overnight, Asian markets were mixed but mostly green.  In Europe, markets are also mixed, but mostly red, especially the FTSE, DAX, and CAC, so far in their day.  As of 7:30 am, once again U.S. futures are pointing to an open higher of between one-tenth and one-third of a percent at this point.

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Despite some push-back by the bears, the bulls maintained control on signing day for Phase-One of a China Trade deal.  This leaves at or very near of all-time highs across all major indices.  Over-extension and earnings remain the obvious risks.  However, the moves, while relentless, are not over-exuberant.  So, continue to trade with the trend, while employing some caution.  Always look for opportunities, but don’t chase. Most importantly, remember to plan your trades, and trade your plans.  Take profits on a very regular basis, move your stops to protect yourself, and wait for the trade to come to you.   

Ed

Swing Trade Ideas for your consideration and watchlist: ANGI, BLDR, VRTX, OTEX, LDOS, ALLE, ANET, ZAYO, TRIP, AMCX, OSTK, LYFT. 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 are not recommendations to buy or sell.

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