Coronavirus roused the sleeping bears.

Coronavirus roused the sleeping bears

The worry over the spreading coronavirus roused the sleeping bears temporarily but calming words from the World Health Organization allowed them to drift back into dreamland.  By the end close of the day, the bulls were solidly back in control and with the big earnings beat out of INTC new records in the NASDAQ are likely at the open today.  During the night, the WHO held off on declaring a global health emergency for now but it will be interesting to see how the market deals with that pending possibility as we head into the weekend. 

Asian market rallied from early lows to close the week mixed but mostly bullish after the WHO decision.  European markets are decidedly bullish this morning in reaction to the WHO holding off on a global declaration.  US Futures also saw a strong bullish reaction during the night, now pointing to a solid gap higher ahead of morning earnings reports and the latest reading of the PMI number at 9:45 AM Eastern.

On the Calendar

On the Friday earnings calendar, we get a little break with just 36 companies stepping up to fess up to their results.  Among the notable for the day are NEE, APD, AXP, SYF, & SNV.

Action Plan

After a rather volatile day of price action, while the market expressed its concern for the spreading coronavirus, those tenacious bulls came charging back.  During the early evening, the futures traded positively but with rather modest gains until the WHO decided to hold off on declaring a global health emergency at least for now.  After their decision, Asian markets found their footing climbing out of the negative with following European indexes following suit and US futures extending their bullishness.  The big earnings beat from INTC after the bell looks to not only recover yesterday’s modest selling but open at new record highs this morning.

Now with 25 lives claimed by the virus and those infected expanding to over 800, it will be interesting to see how the market responds heading into the weekend.  Next week some of the biggest tech companies report such as MSFT, AAPL, FB, and AMZN.  At current prices, there will be a lot of pressure to perform, so let's hope none of them stumble and that the health officials begin to win the fight against corona and we can avoid the major economic impacts of travel restrictions.  As normal, I will be looking to reduce my risk heading into the weekend, tucking in gains for a restful and relaxing weekend.

Trade Wisley,

Doug

Wild-eyed bullish charge slowed.

bullish charge slowed

The wild-eyed bullish charge slowed the last couple days as early rally’s struggled to hold onto the highs.  However, the bears seem to be in hibernation with little to no willingness to even test index price supports.  Trends remain bullish as we head into the biggest day earnings reports this week.  The impeachment trial in the Senate seem to be little more than a distraction during the spreading coronavirus is stealing the media attention from the political drama.  As earnings roll out anything is possible so stay focused on price and plan your risk carefully.

Asian markets closed seeing only red as China locked down two cities attempting to slow the spread of the virus that has now infected nearly 600.  European markets keeping an eye out for an ECB decision and new worries about trade with the US currently have their indexed mixed but mostly lower this morning.  Even the US Futures are displaying caution this morning with mixed but slightly bearish results ahead of a big day of earnings reports.

On the Calendar

We have our biggest day of earnings reports this week and the 1st quarter reports with more than 100 companies in the hot seat today.  Some of the notables include AAL, CMCSA, DFS, ETFC, FCX, INTC, ISRG, JBLU, KEY, KMB, MTB, ORI, SWKS, LUV, TRV, UNP & VFC.

Action Plan

The little rally yesterday ended the day little changed with the Dow closing down less than 10 points.  Although the indexes appear overbought and stretched away from key moving averages, the bears seem to be hibernating with little to no interest in attacking at the moment.  During the night, China put 2 of its cities on lockdown as the coronavirus continues to spread with nearly 600 confirmed cases and 17 deaths so far.  As a result, Asian markets were red across the board as the fear spread amongst investors.  European markets are trading flat to slightly bearish this morning as they wait and ECB decision and the worry of trade issues rising after tough Presidential talk.

Overall index trends remain bullish and thus far, no daily price support levels have breached.  To find anything remotely bearish in the indexes, you have to look at 15 min. charts to see downtrends possibly developing.  With a big of earnings reports, anything is possible but futures are trading mixed to slightly lower this morning choosing a little caution rather than the wild-eyed bullishness we have experienced the last several weeks.  I would not be at all surprised to see a surge of volatility this morning as earnings roll out.

Trade Wisely,

Doug

Bulls Bang-out more New Records!

New Records
Quietly Waiting in the wings.

The bulls bang-out more new records pushing GOOGL into the 1 trillion market cap club and price to earnings growth hits the highest level since Bank of America started recording the metric in the ‘80s.  How much further can you go?  That’s anyone guess, but as retail traders, we must guard ourselves against getting caught up in the exuberance over-trading or chasing trades already up several days in their bull run.  With a 3-day weekend approaching, it may be wise to take some profits and reducing risk in case sentiment happens to shift over the weekend.

Asian markets closed the trading week, seeing green across the board after China reported their economy grew as expected.  European markets have also reached out to new record highs this morning in reaction to the big gains in the US and China news.  This morning US Futures continue to climb, suggesting a modest gap up open ahead of earnings and economic reports. 

On the Calendar

On the Friday earnings calendar, we have 21 companies reporting results.  Notable reports include CFG, FAST, JBHUT, KSU, RF, SLB, & STT.

Action Plan

More new records attained as the bulls continue to surge higher with wild abandon.  Bank of America reported that Price to Earnings Growth is now 1.8 hitting the highest level since they began recording the number in the ’80s.  For reference, a reading 1.0 PEG is considered an overbought condition.  That said, nothing seems to stop the bulls from stretching this rally that pushed GOOGL to a 1 Trillion market cap during yesterday's bullish session.  With a three-day weekend approaching, futures currently suggest another gap up open and more record highs today with no sign of slowing down just yet.

Trading such an overbought condition requires a strong adherence to your trading rules.  It’s very easy with all the bullish exuberance to get caught up, tossing caution to the wind and over-trade.  I have no idea when the tide will change, but believe me when it does; you don’t want to be over-invested because the reversal can be swift and extreme.  Stick to your rules, size your trades properly, don’t chase stocks well into their run or when they are testing price resistance levels, have an exit plan if you're wrong and remember to take some profits along the way!  I wish you all a wonderful 3-day weekend.

Trade Wisely,

Doug

Relentless Bulls

Relentless Bulls

Bad news at Boeing and a spreading coronavirus roused the bears for a 150 point Dow pullback yesterday, but the futures point to gap up open this morning as the relentless bulls keep buying with no regard to the extended prices and historically high price to earnings ratios.  As we begin our biggest day of earnings reports this quarter, it looks like the lowered analyst's estimates could continue to fuel the markets even higher.  However, a word of caution.  With stocks priced well beyond perfection compared to earnings growth, keep in mind just one stumble could trigger a quick reversal, so plan your risk carefully.

That is Question?

Asian markets shook off concerns of travel restrictions due to the spread of the coronavirus to close green across the board overnight.  European markets are however, muted at this hour showing mixed and cautious trading.  US Futures tossed caution to the wind rising sharply overnight and continue to point to a substantial gap up as ravenous bulls can’t seem to buy up high priced stocks fast enough. 

On the Calendar

On the Hump day earnings calendar, we have the largest number of reports so far this season, with over 80 companies fessing up to their quarterly results.  Notable reports include ABT, ALLY, BKR, CTXS, FITB, JNJ, KMI, LVS, RJF, RCI, SLM, STLD, TER, & TXN.

Action Plan

A bit of nervousness about the coronavirus temporarily woke up the bears yesterday with concerns that this contagious and very deadly virus could damage the economy restricting travel around the world.  Of course, the news that Boeing expects further delays before getting approvals to put the 737 Max back in the air aided in the selling yesterday after the company broke down below a key price support level.  After the bell, NFLX posted better than expected earnings but disappointed on subscriber number particularly in the US and Canada.  The initial price reaction was lower, but this morning NFLX is indicated modestly higher.  IBM, after reporting five straight quarters of decline, finally found the right stuff to top analysts estimates as their acquisition of Red Hat helped them turn the corner.

Even with the 152 point decline in the Dow, yesterday index trends remain intact with no break of price supports in the daily charts.  Futures have been in bullish mode all night long as we head into the biggest round of earnings so far this season.  In an interview, the President proclaimed the Dow would be 10,000 points higher if not for the Fed and indicated he was in pursuit of another tax cut to help it along even more.  Stay bullish but remember that many stocks are priced well beyond perfection.  Any stumble could create a quick and substantial pullback so carefully plan your risk carefully and resist chasing stocks already running.

Trade Wisely,

Doug

Bulls Bang-out more New Records!

New Records
Quietly Waiting in the wings.

The bulls bang-out more new records pushing GOOGL into the 1 trillion market cap club and price to earnings growth hits the highest level since Bank of America started recording the metric in the ‘80s.  How much further can you go?  That’s anyone guess, but as retail traders, we must guard ourselves against getting caught up in the exuberance over-trading or chasing trades already up several days in their bull run.  With a 3-day weekend approaching, it may be wise to take some profits and reducing risk in case sentiment happens to shift over the weekend.

Asian markets closed the trading week, seeing green across the board after China reported their economy grew as expected.  European markets have also reached out to new record highs this morning in reaction to the big gains in the US and China news.  This morning US Futures continue to climb, suggesting a modest gap up open ahead of earnings and economic reports. 

On the Calendar

On the Friday earnings calendar, we have 21 companies reporting results.  Notable reports include CFG, FAST, JBHUT, KSU, RF, SLB, & STT.

Action Plan

More new records attained as the bulls continue to surge higher with wild abandon.  Bank of America reported that Price to Earnings Growth is now 1.8 hitting the highest level since they began recording the number in the ’80s.  For reference, a reading 1.0 PEG is considered an overbought condition.  That said, nothing seems to stop the bulls from stretching this rally that pushed GOOGL to a 1 Trillion market cap during yesterday's bullish session.  With a three-day weekend approaching, futures currently suggest another gap up open and more record highs today with no sign of slowing down just yet.

Trading such an overbought condition requires a strong adherence to your trading rules.  It’s very easy with all the bullish exuberance to get caught up, tossing caution to the wind and over-trade.  I have no idea when the tide will change, but believe me when it does; you don’t want to be over-invested because the reversal can be swift and extreme.  Stick to your rules, size your trades properly, don’t chase stocks well into their run or when they are testing price resistance levels, have an exit plan if you're wrong and remember to take some profits along the way!  I wish you all a wonderful 3-day weekend.

Trade Wisely,

Doug

Dow closes above 29,000

Dow closes above 29,000

The Dow closes above 29,000 setting new records amidst a volatile afternoon of price action that required a last-minute rally regain that key psychological level.  With the Phase 1 trade deal finally signed skeptics of the deal seem to have inspired the bears to begin probing for weaknesses creating a little price volatility, but so far, the bulls have proved to defend each attack.  Although stocks are rising, so many appear very stretched out or testing resistance highs traders, have to be very careful not to over-trade and chase entries.

Good Morning! Do I smell Friday on the way?

Asian markets closed mixed but mostly higher seesawing around the flat-line most of the session.  European markets are lower across the board being less than impressed with the partial trade deal with China.  However, here in the US, there appears to be no tepidness whatsoever with the Futures pointing to yet another significant gap up that will set new records.  Over exuberance like this can sometimes end badly, so plan your risk carefully and have an exit plan ready to go if sentiment reverses.

On the Calendar

On the Thursday earnings calendar, we have 29 companies fessing up to quarterly results.  Notable reports include BK, SCHW, CSX, MS, PBCT, PPG, & TSM.

Action Plan

For the first time, the Dow closed above 29,000 amidst a volatile afternoon session after the signing of the Phase 1 trade deal.  In the deal, China has agreed to buy 200 billion of Ag products based on market conditions over the next two years.  As you might imagine, skeptics abound that China intends follow-through on the deal.  Next week the Senate begins the impeachment trial of President Trump.  Although the Senate is expected to acquit the president of all charges, it’s likely to serve as a major distraction next week with a wall-to-wall media circus.

Index trends continue to remain bullish though the price action indicates that the bears are probing for weaknesses creating a little volatility.  That being said, the bulls seem to have relentless energy recovering from a late afternoon selloff in the last couple minutes of the day.  Today we have a few potential market-moving earnings events and a big morning of economic data to inspire the bulls or bears.  I suspect the Retail Sales figures will be the biggest focus today after TGT reported holiday toy sales were lower than expected.  Ahead of all this data, the futures once again point to a substantial gap up open.  As always, guard yourself against the fear of missing out emotion by waiting to see if actual buyer follow-through after the gap before committing to additional risk.

Trade Wisely,

Doug

Is the Bull Weakening?

Is the Bull Weakening

Is the bull weakening or just taking a break hoping to find inspiration in big bank earnings and the signing of the Phase 1 trade deal.  With a push in very select stocks, the Dow once again pushed through the 29,000 barrier but was unable to hold it through the close after being reminded that tariffs will remain in place for the immediate future.  As always, during earnings season, anything is possible, so set aside bias and focus on the price action for clues. 

Asian markets closed in the red overnight ahead of the signing of the Phase 1 deal.  European markets are mixed this morning trading very near the flatline, cautiously as they monitor earnings results.  US Futures traded in the red overnight but have paired most of the losses ahead of earnings, economic, and the Phase 1 signing ceremony that seems to have lost its luster among the bulls. 

On the Calendar

On the Hump day earnings calendar, we have just 22 companies reporting today but there are several potential market-moving reports.  Among the notable are UNH, AA, BAC, BLK, GS, KMI, PNC, USB, & PNC.

Action Plan

After a little struggle, the Dow finally found the inspiration to rally breaking temporarily above 29,000 but was unable to hold it by the close.  While we have the signing of the Phase 1 deal, later today, tariffs will stay where they are until there is confirmation of China’s compliance with the agreement, and Phase 2 negotiations begin.  Most agree that it will likely be after the Presidental election.  Although there was a bit of a bull/bear struggle in the price action yesterday, the bullish trends remain intact.

Today we have several potential market-moving earnings reports and an economic calendar that includes PPI, Empire State MFG., Petroleum Status numbers and the Beige Book.  Futures traded lower all night, but the morning pump has already begun now pointing to a flat open before we get the reports from BAC & GS.  As of yesterday, it looked as if the bulls started running low on energy but perhaps they can be reenergized this morning by strong bank earnings.  Stay focused on price and guard yourself against over-trading while price deals with resistance while working to hold trend.

Trade Wisely,

Doug

Earnings Season Begins

Earnings Season

With a choppy overnight futures session and very high price-to-earnings multiples, the first earnings season of a new decade officially begins today!  Yesterday the bull run continued with new record highs in the SPY and QQQ even as analysts expect sub-par year-over-year earnings performance.  The question on everyone's mind is, will it matter or will the tenacious bulls continue to lower their head and push even higher.  Only time will tell.  In such a strong bull market, it’s very easy to become complacent and over-trade.  Plan your risk carefully, and even though the trend remains strong, make sure you have an exit plan and understand the risks you are taking in case the bears come out of hiding and begin to impose their will.

Asian markets overnight closed mixed but mostly lower as the Yuan rose ahead of the Phase 1 deal signing.  As I write this report, European markets are trading modestly lower across the board.  US Futures markets have been choppy ahead of the big bank earnings that will likely set the stage for today's market. 

On the Calendar

Today is the official beginning of the 1st quarter earnings season, which seems to extend almost all the way into the 2nd quarter.  Make sure your checking when a company reports before making a trading decision as part of your trade planning to avoid possible unfortunate surprises.  We have 20 companies reporting today, with the most notable being DAL, C, JPM, SPHA, INFO, WFC, & WIT.

Action Plan

We have seen rather choppy futures overnight heading into the official beginning of 2020 earnings.  Trends have been incredibly bullish ahead of a week outlook for earnings results, but the big question is, will it matter?  Year over year, comparisons show that companies are making less; consequently analysts lower the expectations bar making it easier for the company to leap over the target.  With price-to-earnings multiples going higher and higher as stocks continue to race higher, we have to question how long this condition can continue.

Analysts seem to suggest a market pullback is likely, but the very strong bullish trend would seem to suggest the bulls don’t care what the analysts think.  Another imbalance we currently see in the market is that only 5-companies, AAPL, GOOGL, AMZN, MSFT, and FB make up 18% of the total market cap of the entire S&P-500.  According to Morgan Stanley, this is unprecedented dominance, while Bank of America is warning the “rising correlation and concentration risks’ for the market.  So what is the retail trade to do?  Set aside your bias, focusing on the price action on the indexes and the stocks you choose to trade.  Plan your trades, understand the risks before entering and trade your plan with the knowledge that Price is King!

Trade Wisely,

Doug

Bullish Trends Continue

Bullish Trend

After briefly breaching 29,000 with a very narrow large-cap leadership, Friday’s price action ultimately left behind bearish engulfing candle patterns while still solidly holding onto bullish trends.  With earnings season kicking off on Tuesday with big bank reports, the expected signing of the Phase 1 trade deal on Wednesday, and a busy economic calendar, traders will have to be ready for almost anything.  In such a strong bullish run, it's easy to become complacent, but with stocks trading at such high multiples, that would be unwise.   Plan careful, and never forget the market can quickly shift direction.

Asian markets closed green across the board last night as they await the signing of the Phase 1 trade deal.  European markets, however, are trading cautiously this morning with indexes flat to mostly lower focused on developing geopolitical tensions with Iran.  US Future this morning seems to be tossing caution to the wind pointing to a gap open.  With Friday’s bearish engulfing pattern, be very careful chasing into this morning gap.

On the Calendar

On the Earnings Calendar, we have just 12 companies reporting results but there is only company SJR that’s particularly notable today.  However, keep in mind 1st quarter earnings season kicks off on Tuesday with several big bank reports.

Action Plan

There was a very interesting weekend of news with talking heads issuing very contradictory predictions of the future direction of the market.  Protestors hit the streets in Iran after the government admitted to downing the Ukrainian 737 passenger plane.  The President has come out in support of the Iranian protestors noting their courage is inspiring.  At the same time, the Iranian leadership continues to threaten additional retaliation.  Scheduled for Wednesday this week is the expected signing of the Phase 1 trade deal with China, that’s to provide some protection for US intellectual property as well as large Ag purchase commitments from China.

With markets already at very high multiples and expectations of slower earnings growth, reports indicate that GS, BAC and other large investment banks are advising their clients to move assets to a more passive dividend collection strategy as they expect only a 2% market growth in the coming year.  At the same time, others are suggesting 2020 could be a solid earnings growth year and projecting substantial market growth.  I think all the contradiction would suggest that no one can predict the future and the best we can do as retail traders is to setaide our bias, focus on the charts, and price action within.  Up, down or sideways price action will lead the way to a profit.

Trade Wisely,

Doug  

Bulls are running with wild abandon.

Bulls are running with wild abandon

The bulls are running with wild abandon breaking records in what seems an insatiable desire to buy up stocks.  Closing at a new record high and only a few points away for 29,000, the only stumbling block ahead is the Employment Situation number that consensus estimates suggest a possible decline.  Next week begins the 1st quarter earnings season and the current rally seems to suggest tremendous confidence in strong earnings outcome.  Companies will need to produce some impressive results to support current prices.  Consider your rick carefully as we head into the weekend.

Overnight Asian markets closed the week mixed but mostly higher.  This morning European markets are mostly bullish across the board as they continue to monitor US-Iran tensions.  US Futures have been bullish throughout the night and suggest a modest gap up open ahead of the Employment Situation number.  With the weekend quickly approaching and the beginning of earnings season just around the corner, it may be a really good time to take some profits and reduce some risk.

On the Calendar

On the Friday earnings calendar, we have just six companies fessing up to quarterly results.  However, the only notable report today comes from INFY before the bell.

Action Plan

Another big day a rally yesterday as the bulls seems to have an insatiable desire to buy up stocks.  The market gapped up to new record highs and continued to find more buyers throughout the day.  Futures this morning continue to reach out for new highs ahead of the Employment Situation number at 8:30 AM eastern. Such an exuberant rally ahead of earnings suggests the market believes we will see substantial earnings growth this quarter.  Analysts, however, are suggesting negative growth is possible, which could create an interesting situation when earnings season kicks off next week. 

According to analysts, the price to earnings ratio is near a 20 year high.  That could put a lot of pressure on companies to perform nearly perfectly or suffer the result of disappointing investors.  It’s looking more and more likely that Iran shot down the 737 with a Russian made missile.  Iran has threatened additional retaliation.  Amidst this uncertainty, the House passed a resolution attempting to limit the Presidents' power to take action with Iran.  With the Dow, just a few points from reaching 29,000 for the first time ever, I’m guessing the institutions will do as much as possible to get that headline.  The only possible stumbling block to that goal is the Employment number that consensus suggests may decline today.

Trade Wisely,

Doug

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