Though trade and Brexit issues continue to plague the market with uncertainty, this week’s ramp-up of 4th quarter earnings will draw all the attention. As we begin to hear results from industrial’s , multi-nationals, and big tech let’s hope they can follow the lead of the big banks producing earnings that support or bolster current prices. Trouble at BA and JNJ will need some strong results out of companies such as CAT that reports this week to counterbalance the index. As always, with earnings, anything is possible, so remain flexible and focused on price action for clues.
Asian markets closed the day cautiously green across the
board amid Brexit uncertainties while European indexes shrug off concerns putting
on a brave face with all indexes trading modestly bullish this morning. US Futures ahead of earnings reports and a quiet
economic calendar currently indicate a slightly bullish open having declined
slightly from overnight highs. Ready or
not, the earnings ramp-up volatility begins.
On the Calendar
The Monday Earnings Calendar has over 60 companies expecting
to report results today. Notable reports
include ACC, CE, TACO, ELS, HAL, LOGI, PETS, AMTD, & ZION.
Action Plan
Friday proved to be an interesting day of price action after
learning that BA may have misled the FAA and that and that JNJ may have been
selling baby power with trace amounts of asbestos. With both companies included in the Dow
average, the index had a very tough day falling 255 points by the close. The Brexit uncertainty also likely played a
hand in the reduction of risk as we headed into an expected vote. Unfortunately, we now know that the Prime Minister
was forced to ask for an extension and postponed the divorce deal vote. Now we wait to find out if the EU officials will
grant the extension with the deadline rapidly approaching.
Looking over the technicals, the DIA took the brunt of the
damage on Friday, but all in all, the indexes held above important price
support levels and their 50-day averages.
Futures have softened slightly from overnight highs, but at the time of writing,
this report suggests a modestly bullish open this morning. With 4th quarter earnings ramping
up and several market-moving reports on the economic calendar with week price
action volatility is likely, and anything is possible. Let’s hope as industrials, and big tech begin
to report they can follow the lead of the big banks with better than expected
results.
Price action over the last few days has been quite choppy,
but technically there may be a silver lining forming in the index charts. As price continues to challenge overhead
resistance a nice resting consolidation appears to be forming. After all the wild price swings, a
consolidation above 50-day averages allows the averages time to catch up,
providing bullish support to prices. Of
course, political unrest and earnings could easily bring back the wild
volatility, but for now I see this consolidation as productive and bullish.
During the night China reported their economy grew less than expected at 6 percent, closing Asian markets mixed but mostly lower. European markets are trading very cautiously this morning ahead of crucial Brexit vote coming this weekend that, according to reports, may not have the support needed to be successful. US Futures also indicate a flat and cautious open ahead of earnings reports and an uncertain weekend vote.
On the Calendar
On the Friday Earnings Calendar, we
have 37 companies as we wrap of the first week of 4th quarter
earnings. Notable reports today include
AXP, CFG, KO, KSU, MAN, SLB, STT, SYF, & VFC.
Action Plan
Once again, the Bulls tested resistance levels on the news
of a draft Brexit agreement, but a decline in Housing Starts tempered their enthusiasm. This morning we have learned that the draft agreement
has a tough challenge ahead and could fail in Parliament according to a preliminary
headcount. China reported last night it’s
economy grew slower than expected in the third quarter at 6 percent.
Although the market seems to be struggling with overhead
price resistance with all the political uncertainties that continue to disrupt
market sentiment, technically, there may be a silver lining forming in price action. After such a strong rally higher is looks as
if the indexes are settling into a consolidation, allowing long-term averages
time to catch up and building a platform that has the potential to be very
bullish. Of course, earnings and politics
will have a lot say about future direction, but as of now the bulls seem very
determined. As we head into the uncertainty
of the weekend, plan your risk carefully.
As solid beat by NFLX and early morning news of a draft Brexit
deal is making the bulls very happy this morning. The QQQ now looks ready to lead the way and challenge
all-time highs in the index. Still ahead
is our biggest day of earnings reports this week with a busy morning of Economic
reports for the market to digest before the open. Though I’m rooting for the bulls, we have to
remember that the bears are unlikely to give up easily. Traders should be careful not to chase
morning gaps into resistance highs with the fear of missing out and remember
pop and drop pattern can occur in this area.
During the night, Asian markets closed mostly lower as China issued threats of no deal if December tariffs are not removed. However, European markets are green across the board this morning after news of a draft Brexit raises hopes. US Futures also quickly responded higher this morning on the Brexit news pointing to a bullish open ahead of a big day of possible market-moving events.
On the Calendar
On the Thursday Earnings Calendar, we have our biggest day
of reports this week, with over 75 companies reporting results. Notable reports include ETFC, BBT, DHR, DOV,
EXPO, GPC, HON, ISRG, IVZ, KEY, MTB, MS, PM, SKX, SNA, STI, TSM, & UNP.
Action Plan
After what the UK is calling a last-ditch effort, a new
Brexit deal has emerged lifting hopes as October 31 deadline approaches. Now the question to be answered will Parlement
ratify the deal? European markets surged
higher on news of the draft agreement as did the US Futures. Yesterday the market languished in a sideways
chop after a disappointing Retail Sales number that showed even online sales had
declined. On the bright side, builder
stocks sharply rallied along with building material providers.
Last night solid earnings beat my NFLX may clear the path
for the QQQ to reach out and test record highs in the index even though IBM
disappointed investors. With the NASDAQ
surging and a possible Brexit deal, the US Futures are suggesting a gap up open
ahead of the biggest day of earnings reports this week and a busy Economic
Calendar with several possible market-moving reports occurring before the
opening bell. That means anything is
possible this morning, but as of now the bulls are in control and seem determined
to test all-time market highs.
With a solid kickoff to earnings season, JPM and UNH inspired
the bulls to test price resistance levels in the indexes. Hopeful reports of a Brexit deal yesterday has
now stalled according to reports as the deadline quickly approaches. We have a busy morning of earnings reports and
a very important Retail Sales number at 8:30 AM Eastern for the market to digest
before the open today. BAC got the ball
rolling this morning with an earnings beat, but the futures seem a bit cautious
this morning with all the political uncertainty.
Asian market closed trading mixed but mostly higher as hope
news of a draft Brexit deal lifted spirits.
European markets bounce between negative and positive this morning as they
weigh the possible outcomes of Brexit.
US Futures traded in the red most of the night, and this morning
continues to suggest a modestly lower open ahead of early morning earnings and
retail sales reports.
On the Calendar
We have more than 50 companies reporting earnings on the
second day of earnings season. Notable reports
include IBM, ABT, AA, ALLY, BAC, BK, CCI, CSX, KMI, NFLX, PYPL, PNC, STLD,
& USB.
Action Plan
Good earnings reports in JPM, UNH, hopeful Brexit deal news,
and tech analysts upgrades lead to a broad-based rally to challenge price
resistance in the indexes. After
climbing sharply throughout the morning session, upward progress stopped about
as suddenly as is began spending the remainder of the day in a narrow range
chop zone. This morning we’ve learned that
the Brexit negotiations have stalled, BAC had better than expected earnings,
and Moody’s declared a high risk of global recession in the next 12 to 18
months.
Ahead of a busy morning of earnings reports and a Retail
Sales report, futures point to a modestly lower open at the time of writing this
report. I think the big question remains
can companies produce earnings to support these high prices during an extended
trade war as economies slow around the world? The Big Banks are getting it done, so let’s hope
we see that trend continue with big tech reports beginning this afternoon when
NFLX and IBM reports. Technically speaking,
the bulls are in control with all four major indexes above their 50-averages. However, they remain challenged by downtrend and
price resistance levels that have proved tough to breach with so much political
uncertainty weighing heavily on the market.
Although there seems to be swirling political uncertainty everywhere the market will not turn its primary focus to the beginning of the 4th quarter earnings season results. JPM has already let the way this morning with a solid beat gaping the stock higher and emboldening the bulls in the futures market. Let’s hope the other big banks can do as well this week as earnings ramp-up in the weeks ahead.
Overnight Asian markets closed mixed as traders remain cautious on the proposed Phase 1 deal that many are now calling a temporary cease-fire. European markets are mixed but mostly higher as EU negotiator gives hope of Brexit deal this week. US Futures are currently green across the board as big bank earnings roll in this morning. As of now, futures point to gap up of more than 100 Dow points, but that could easily improve or sharply diminish so expect volatility and stay focused on price action for clues forward.
On the Calendar
Today begins 4th Quarter earnings with 42
companies on the Earnings Calendar expected to report. Among the notable reports are C, JPM, KEY,
BLK, SCHW, TACO, GS, JBHT, JNJ, PGR, PLD, SNBR, UAL, UNH, WFC & WIT.
Action Plan
How we deal with today depends very much on how the market
responds to the early morning earnings reports.
Futures seem to have considerable confidence that the results from the
big banks this morning pointing to more than a 100 point gap up open. According to reports very early this morning,
one of the Brexit negotiators says a deal is still possible this week, creating
a rally in the sterling. We, of course,
will have to watch closely for developments in the Phase 1 deal is being renamed
by some as merely a temporary cease-fire in the trade war. Tariffs on China will increase to 30% in
December if the deal fails. Attempting
to punish Turkey for its Syrian invasion the President has raised steel tariffs
on the country to 50% and cleared the administration to pursue all available economic
sanctions.
Though all this political uncertainty has made for very challenging price action focus will likely turn to earnings results as 4th quarter reports ramp up this week. With the DIA, SPY, and QQQ holding above their 50-day averages with significant gaps below, we will need some sold results to prevent prices from sliding into the gap. As I write this, JPM has reported positive earnings results and is gaping higher. Let’s hope the other big banks can do the same settling frayed trader’s nerves and put some structure back into the chart technical’s without all daily reversals and whip.
Friday’s huge short squeeze rally seems the market seems to
be struggling this morning with the very vague so-called Phase 1 deal as China
now says they need more discussion before signing anything. Over the weekend, we’ve also learned that the
Brexit deal is once again proving elusive with the Sterling reversing Friday’s
hopeful gains. We also know the conflict
between Turkey and Syria has escalated and that Hong Kong protesters are
talking about scaling back on their activities.
What a difference a weekend can make!
Asian markets closed green across the board overnight, but
that sentiment has not translated into bullish notions in Europe, which are
currently seeing red across the board this morning. US Futures have recovered from overnight lows
as the vague Phase 1 deal may be harder to close than the hopeful market initially
thought. With today being a banking
holiday and 4th quarter earnings beginning Tuesday a light and
choppy day would not be out of the question after a what could be a volatile
open.
On the Calendar
Because it’s the national holiday Columbus Day banks and
bond markets will be closed today. As a
result, we have no Economic Calendar reports today.
We have just nine companies reporting earnings today, but none
are particularly notable and unlikely to be market-moving. However, keep in mind, the official beginning
of the 4th quarter earnings begins Tuesday morning with several big
banks reporting.
Action Plan
What a difference a weekend can make. After a huge short squeeze rally that closed
the Dow over 300 points higher on news of a partial trade deal. This morning the news seems to have reversed,
suggesting that China needs more discussion before a possible deal can be
signed. Details of the so-called Phase 1
deal have been few and far between; in fact one could argue extremely vague. By the way, how many Phases are there? In other news, the conflict between Turkey
and Syria has escalated over the weekend with Turkey preparing to invade a northern
Syrian city.
The positive news of Brexit progress seems to have also
shifted as many not suggest Britain will need to ask for another extension which
the Prime Minister is not in favor of doing.
On a technical basis the DIA, SPY, and QQQ are now well above their
respective 50-day averages but have left significant gaps behind as well as not
so confident shooting start candle patterns behind. As I write this report, futures are pointing
to lower open but rallied to cut the overnight lows almost in half. I would not be at all surprised to see the
overnight lows tested after the open.
With today being a banking holiday with the bond markets closed, I’m
expecting a light and choppy price action after the morning rush as we wait for
the official kick-off the 4th quarter earnings on Tuesday.
Abounding optimism of a trade deal has the market surging higher this morning even though we have not seen any details as to what negotiations have produced. Will there be a deal, a partial deal or could this morning gap be irrational exuberance? Could this trigger a huge short squeeze that drives short traders of the market, or might this create a big pop and drop pattern if we learn there is no deal and tariffs increase next week? The bigger question is, how will you manage your risk as we head into the weekend if we have no answers to these questions by the close of today?
Overnight Asian markets closed the week green across the
board on trade optimism. European markets
are also decidedly bullish this morning amid rising hopes of a Brexit deal
coming together. US Futures point to a
wildly bullish gap up open of more than 250 Dow points as the President, and
the Vice-Premier conclude the 2-day meeting today. With such an emotionally charged market, remain
flexible and prepare for volatile price action in reaction to trade
developments.
On the Calendar
We have 14 companies expected to report on the Friday
Economic Calendar. Notable reports include
FAST and INFY before the open today.
Action Plan
Looking at the US Futures this morning, I’m honestly speechless
at the huge bullishness this morning after positive comments on negotiations
with early today. It seems we’ve been
down this road before that ended with no deal, but the market is wildly this
morning even though there have been no details released. Perhaps we’ll know more later today but be prepared
for potential violent volatility as the news rolls out. There is also hopeful news from across the
pond that the British Prime Minister and the EU have found some common ground after
reporting a path to a Brexit deal is improving.
Today’s huge gap up could trigger a big short squeeze
forcing the market even higher. T2122
could easily swing from short-term oversold to short-term overbought all at
once, making a mess of the chart technical.
We should also not rule out the possibility of a pop and drop pattern
that could quickly develop if the trade news happens to spin the opposite direction. The big question for me is, what happens if
we hear no details on trade negotiations until after the market closes? How much risk are you willing to hold into
the weekend? Plan carefully and remain
focused on price as the emotionally charged market could provide a very wild
ride today.
During the evening and night, we saw just how sensitive to
news reports and how emotionally charged the market has become over China’s trade
developments. While the markets seem to hold
on the notion of a partial deal coming together in the high-level talks, reports
suggest the 2-day meeting may have shortened to just today. Stay tuned, stay focused, and stay very
directionally flexible as each new report could substantially move the market violently. Plan your risk carefully.
Asian markets recovered early losses by the close of the day
on conflicting reports regarding trade.
European markets are trade cautiously mixed as negotiations resume in
Washington DC. US Futures recovered from
steep losses during the evening and indicated just how quickly market sentiment
could shift as news on progress or non-progress of the negotiations rolls
out. Remember, an October tariff
increase to 30% will happen unless something changes with the US/China
relationship.
On the Calendar
On the Thursday Earnings Calendar, we have our biggest day
of reports this week, with 25 companies fessing up to results. However, there is only one DAL, which is
reporting before the opening bell that’s notable.
Action Plan
Conflicting news reports created a wild night of price
action that saw futures collapse more than 200 points but recovered to near
falt this morning. That’s a clue to just
how emotionally charged and sensitive the market has become over any news on the
high-level talks today. It sounds as if
the China negotiations may start and end today rather than the planned 2-day
schedule. What we know as of now is that
tariffs on 250 billion dollars of Chinese products will increase from 25% to
30% on October 15th.
Traders should prepare for the possibility of very violent
price moves as news comes out concerning the progress of the talks. Technically, speaking the indexes are at a
critical crossroads, with prices hanging just below declining 50-day moving
averages and substantial price resistance just above. With such unstable price moves, this can
become a day-traders market due to will price action fluctuation and the
overnight reversal risks. Carefully plan
your risk and remain very directionally flexible as we wait for news on trade
negotiation developments throughout the day.
The markets gap down and run south as tough talk between US
and China dims the chances of a trade deal Tuesday. However, Wednesday morning, an unnamed
official says China is willing to make a partial deal, but unwilling budge on
any of the core issues and, the market gaps up as this ridiculous price whip continues
to chop trader’s account to pieces. Before
you jump into this morning’s gap keep in mind the indexes continue to show current
downtrend with 50-day averages in decline.
Fool me twice, shame on me!
Asian markets closed mixed and mostly lower on the uncertainty
of trade talks that begin on Thursday.
Responding to the Bloomberg report and hopefulness of a partial trade deal
European markets are higher across the board this morning. US Futures rose sharply after the 6 AM news
story and indicate the Dow will gap up between 150 and 200 points at the open
as we wait for the release of the FOMC minutes later today.
On the Calendar
On the hump day Earnings Calendar, we have just eight
companies reporting their results today, but none are market-moving or
particularly notable.
Action Plan
At 6 AM, Bloomberg reported that an unnamed official close
to trade negotiations that China is willing to make a partial deal. The news quickly spiked the Dow Futures higher
at one point, suggesting a 200 point gain at the open. Apparently, China is willing to commit to purchasing
of farm products if the US stops tariff increases. However, they are unwilling to budge on any of
the major sticking points. The President,
in the past, said tariffs are to increase on OCT.15th if no progress
is made on a bilateral deal. I guess the
good news is that at least today’s gap is to the upside! Trade negotiations begin this Thursday, stay
tuned for future gaps and whips in price.
According to reports, Turkey is about ready to invade Syria,
as US troops pull back as the President attempts to fulfill a campaign promise
to bring our troops home. The UN has
reported they are in a desperate financial situation and may not be able to pay
staff by November because so many countries have failed to pay their dues,
making their peacekeeping operations impossible. Technically, speaking the indexes are in a
current downtrend with declining 50-day averages amidst so much swirling
uncertainty. Be careful not to chase
this morning’s gap, and remember we have the FOMC minutes release at 2:00 PM Eastern
this afternoon.
With the indexes leaving behind shooting star candle patterns
at price resistance levels yesterday seems to suggest that trader’s hopes of
progress in the coming trade talks have diminished. Reports that Brexit talks could be failing is
not helping as currencies fluctuate, and Oct. 31 deadline quickly approaches. Growing unrest between Turkey and Syria due to
the Presidents decision to withdraw US Troops and increasing tensions between
Iraq and Ecuador rising oil prices, it’s no wonder market prices continue to so
volatile and extremely challenging to trade.
It’s truly a day-traders market with all the unrest and news sensitivity
and changes market direction in half a heartbeat.
Asian market rallied to close green across the board last night
as China television banned NBA broadcasts over Hong Kong protest comments. European market are however decidedly bearish
this morning as trade hopes sink and a no-deal Brexit grows. US Future points to a substantial gap down
this morning as it faces so much uncertainty in the coming days.
On the Calendar
On the Earnings Calendar, we have 11 companies reporting
quarterly results today. Notable reports
include HELE, LEVI, and DPZ.
Action Plan
Reports this morning suggest Brexit talks are breaking down quickly
hit the currency markets as the sterling fell in reaction. The President’s decision to bring US Troops
home from Syria has drawn rebuke from his most staunch supports in Congress and
increasing the likelihood that Turkey will invade Syria further destabilizing the
region. Oil prices are on the rise this
morning, with increasing tensions between Iraq and Ecuador escalate. Ahead of trade negotiations, the US dollar is
pulling back, and gold is on the rise this morning, and the Chinese media
suspends NBA broadcasts over comments supporting Hong Kong protests.
Top off all this unrest with tough talk from China and hopes
of a productive outcome of this week’s talks seems to have greatly dimmed this morning. With the index charts testing price
resistance levels yesterday and leaving behind bearish shooting star patterns, a
pullback to is not a big surprise.
However, the futures seem to be painting a grim picture this morning with
a substantial gap down expected amidst all the swirling uncertainty. I continue to expect unruly and price action driven
by the news reports that can chop a trader’s account to pieces.
