After a big short squeeze rally in reaction to the jobs
number that suggested a 2020 recession is less likely but left the door open for
more rate cuts, the US indexes are once again knocking on the door of price resistance. With trade talks set to resume this week and threatened
tariff increases scheduled next week, traders should prepare for a news-sensitive
market. As protests continue to disrupt
Hong Kong and amidst impeachment proceedings, perhaps an interim agreement could
be reached to at least delay future tariff increases by both countries, but I
wouldn’t hold my breath in anticipation.
Last night Asian markets closed down across the board with all eye on the forthcoming trade talks. European markets are, however, cautiously bullish this morning ahead of trade talks and a rapidly approaching Brexit deadline. US Futures have rallied substantially off of overnight lows but continue to suggest a slightly lower open as uncertainty swirls and with significant technical resistance levels just above. With little on either the earnings and economic calendar for the market to react to, I would not be surprised to see a choppy price action today.
On the Calendar
On the Earnings Calendar we have just eight companies expected
to report today, but none of them are particularly notable.
Action Plan
The Employment Situation report Friday was strong enough to ease
concerns of a US recession in 2020 but not so strong that the market still
believes in another rate cut is on the way.
Combine that with a short-term oversold condition, and short squeeze trigger
huge rally right back into price resistance levels. As the US and China prepare to resume trade
talks this week, the news spin cycle it running at full speed likely to create
will price swings as they speculate on the outcome. Many are hoping for at least an interim agreement
to stop that would stop the possible tariff increases set to increase next
week.
With the ongoing Hong Kong protests and impeachment proceedings,
both countries have good reason to get this frustration behind them, but I would
not expect either side to give in easily.
Futures have rallied this morning off the overnight lows that had
suggested a substantial gap down. With
no notable earnings to react to and a very light economic calendar, expect the
market to be very new sensitive with choppy price action. The indexes have substantial price resistance
levels above to deal with, and after a 2-day rally of more than 800 Dow points,
a little rest or consolidation would not be a big surprise as we wait for trade
talks to resume.
With the world is watching and inquiring minds wait in anticipation for the release of the Employment Situation number and how it will impact today’s open. Can it provide the bullish inspiration needed to follow-though on the hopeful bullish hammer patterns left behind yesterday, or will is disappoint adding fuel to the fire of a slowing US economy? How we end this trading week will greatly depend on this key metric and will shape how the market opens today.
Asian markets were mixed overnight as Hong Kong imposes emergency
law as anti-China protests continue to disrupt the city. As of the writing of this report, European markets
are mixed but mostly higher, but expect that also greatly fluctuate depending
on the result of the US Employment numbers this morning. US Futures are currently pointing to a lower open,
but that’s likely to change significantly after the 8:30 AM release of the
Employment number. Buckle up; it could
be a volatile end to a week of technically damaging and tumultuous price action.
On the Calendar
On Friday’s Earnings Calendar, we have just five companies
reporting results today with none that would say are market-moving or particularly
notable.
Action Plan
Our last notable earnings report for the week, COST,
slightly beat on estimates but seems to have disappointed investors that were
hoping for a strong showing for the quarter.
Interestingly that single report seemed to influence the trading of the
overnight futures. Protests continue to have
damaging impacts on Hong Kong after the city declared emergency law last
night. This morning’s total focus of the
market focus on the Employment Situation number that comes out an hour before
the market open. The consensus is
expecting 145K jobs with a low range of 120k and upper range of 179k. Of course a surprise beat or miss of the key
metric could have a profound impact on how the market opens today.
Yesterday the Dow briefly dipped below it’s 200-day moving
average while the SPY and QQQ managed to bounce before reaching this key support. Unfortunately, the IWM is well below the 200-day
average and will soon display the death-cross with the 50-day dipping below its
200-day. All the indexes experienced a
nice bounce rally yesterday leaving behind hammer candle patterns seen as
potential bullish. However, if price
action is unable to follow through to the upside today the significance and hopefulness
of the hammer pattern diminishes dramatically.
Thus, there is a lot at stake for the Employment Situation report, and
the world is watching.
After a punishing selloff, the market will face an expected
decline in Factory Orders and the ISM Services Sector report this morning the worry
that the global slowdown has expanded into the US economy. Following a win where the WTO agreed with the
Whitehouse, the President has scheduled 7.5 billion in European new tariffs on
OCT. 18th, opening a new front on the trade war and raising concerns
of recession.
Asian markets closed mixed but mostly lower on the ramp-up of trade tensions in Europe. Across the pond, European markets also trade mixed as concerns about how the new tariffs will affect there already weakening economy. Currently, US Futures point to a modestly bullish open ahead of economic reports. Remember we have the Employment Situation report before the open Friday, so plan your risk carefully and don’t be surprised if the price action becomes stale and choppy as we wait.
On the Calendar
On the Thursday Earnings Calendar, we have 12 companies reporting
results. Notable reports include STZ,
COST, and ISCA.
Action Plan
Following an ugly 2-day selloff after a disappointing ISM Manufacturing
report, we will get a reading on the service sector with the ISM Non-Mfg report
at 10:00 AM eastern along with Factory Orders.
The consensus is expecting only a small decline in the services number and
an expectation that orders will slip negative that could raise fears of a spreading
global slow down. After the World Trade
Organization ruled that European government subsidies on aircraft is an unfair
trade practice; they cleared the way for the US to impose new tariffs. The President has scheduled 7.5 billion in tariffs
to increase on OCT 18th widening the trade tensions and raising
concerns of a US recession.
Technically speaking T2122 suggests a short-term oversold
condition, but it will be interesting how the market responds to the opening of
another trade war front in Europe. After
two strong days of selling the Dow continues to hover above its 200-day average
as does the QQQ and SPY. Unfortunately,
any market relief rally must come under scrutiny as a possible lower high that may
confirm the beginning of a market downtrend.
Of course, with the Employment Situation number on Friday, 4th
quarter earnings just around the corner, and trade talks with China to resume
soon traders will have to prepare for just about anything.
An unexpectedly poor manufacturing number quickly reversed early
bullishness yesterday creating a nasty whipsaw and leaving behind some worrisome
price patterns. The major indexes all
dipped below their 50-day averages by the close as they each left behind
bearish engulfing patterns in the process.
Most troubling was the notable reversals in the financial, transport,
and technical sectors. Technical
failures in an already uncertain market will likely spark some fear in the
market so prepare for higher volatility in the days ahead.
Overnight Asian markets closed in the red across the board in
reaction to global slowdown fears. Market
in Europe is also looking lower this morning as they wait for the Prime Minister
to unveil a revised Brexit proposal for the UK.
US Futures have bounced off of overnight lows but still point to substantial
gap down this morning and a possible short-term oversold condition according to
the T2122 indicator. Expect price action
to be volatile, news sensitive and, challenging even for very experienced
traders.
On the Calendar
On the Wednesday Earnings Calendar, we just 12 companies fessing
up to quarterly results. Among the
notable reports, today are BBBY, LEN, AYI, LW, and PAYX.
Action Plan
On the day after JNJ pays a large fine to settle their roll
in the opioid crisis, traders might be
looking for something to relieve the pain of yesterday’s selloff and the
substantial gap down setting up this morning.
By the close on Tuesday all the major indexes slipped below their 50-day
moving averages leaving behind some worrisome technical damage in the
charts. A surprisingly disappointing
manufacturing number created an ugly whipsaw that left bearish engulfing
candles all over the place yesterday.
Notable reversals in the financial sector and transports and
the technical damage in the tech sector are particularly troubling. At the time of writing this report, US Futures
have bounced off of their overnight lows but still suggest a gap down of
nearly 150 Dow points at the open. According to the T2122 indicator this will
create a short-term oversold condition so be careful not to chase bearish
positions already well into their move lower.
Remember this is a very emotional news-driven market, so plan your risk
carefully and be willing to take profits quickly as they can be very fleeting in
this environment.
As this frustrating range-bound consolidation continues, we can thank our friends down under for the possibility of the second day of bullishness as Australia cuts interest rates to just 75 basis points. Of course, we can’t rule out the possibility of a pop and drop pattern by the end of the day, but at least for now the bulls seem inspired to follow-through on yesterday’s rally. With the uncertainty of 4th quarter earnings and China trade negotiations scheduled in the new 2-weeks, I wouldn’t be all surprised to see the price action remain choppy and range-bound.
Overnight Asian markets recovered from early bearishness to
close mostly higher in reaction to the Australian rate cut. European markets are not sharing in the bullishness
currently flat to mostly lower this morning.
US Futures point to a modestly bullish open ahead of PMI, ISM, Construction
spending reports as well as a parade of Fed speakers. It would seem October will continue to face
considerable uncertainty and likely to remain news-driven with enough daily gaps
and overnight reversals to keep traders guessing, What comes next?
On the Calendar
The Tuesday Earnings Calendar says we will hear from just seven
companies reporting results. Notable
reports include MKC and SFIX.
Action Plan
We can thank Australia for slashing its interest rates to a
new record low of just 75 basis points inspiring the possibility of a seconded
day in a row of bullish price action.
During the night, Asian markets were struggling until the rate cut but
closed the trading day mostly higher on the news. US indexes remain locked in a choppy range-bound
consolidation that but except for the QQQ’s have successfully held their 50-day
morning averages. On the whole, I would
have to count that a win for the bulls considering all the swirling uncertainty
the market faces.
With 4th Quarter earnings just 2-weeks away, it’s
sadly possible; the market could continue in this choppy and challenging consolidation. With Washington politics in utter chaos and
pending China Trade negotiations set to begin in a couple of weeks, we should
expect October to remain a challenging news-driven market with enough gaps and
overnight reversals to test the discipline of even the most experienced
traders.
Yesterday’s whistle-blower hearing brought the buyers to a
screeching halt producing another pop and drop pattern. After the hearing, the bulls made a lackluster
attempt to rally that was frustratingly choppy as the partisan rhetoric rose to
a deafening roar of uncertainty. Traders
will have to weigh the risk of the weekend carefully considering that anything
is possible by Monday’s open.
During the night Asia markets closed mixed but mostly lower with
trade talks set to resume on Oct. 10th. The markets in Europe are green across the board
as trade hopes outweigh the US political turmoil. US Futures point to a modestly bullish open
ahead of the Durable Good & Personal Income economic reports. Expect more indecisiveness as we head into
the weekend.
On the Calendar
We have just 14 companies expected to report earnings on the
Friday calendar. Among those reporting,
I’m not seeing any particularly notable reports today.
Action Plan
The frustratingly choppy price action continued yesterday after
once again gaping up then finding more sellers than buyers during the whistleblower
hearing in Congress. The nonstop barrage
of partisan spin is hard to ignore, but it’s imperative that we stay focused on
price action to navigate this very difficult market.
After the close yesterday, we learned that US/China trade
negotiations would resume on Oct. 10th, only 5-day before the
tariffs are scheduled to increase. Let’s
hope the talk fast and that the President is correct when he said a deal is
closer than most think. We have a light
day on the earnings calendar but keep an eye on the Durable Good Orders as well
as Personal Income reports at 8:30 AM Eastern.
With so much uncertainty as we head into the weekend plan your risk carefully. Literally, anything is possible come Monday’s
open!
The mere mention by the President that a deal with China may be closer than everyone thinks and the market rallied shaking of the impeachment drama. More importantly, the SPY bounced off its 50-day average, and the QQQ recovered this key technical support with ease. As bullish as yesterday’s move appears, we must remember that one day does not make a trend and that we still have significant price resistance above for the bulls to overcome.
Overnight Asian markets closed mixed but mostly higher on renewed trade hopes, and European see green across the board in response the Presidents comments on a trade deal. US Futures are pushing for a critical follow-through of yesterday’s rally pointing to a modestly bullish as I write this post. With several notable earnings reports ahead as well as a busy morning on the economic calendar anything is possible. Plan carefully and stay focused on the price action for clues as we approach price resistance levels.
On the Calendar
On the Thursday Earnings Calendar we have 21 companies reporting
results. Notable reports include CAN,
CCL, CAG, FDS, MU, and MTN.
Action Plan
The market shook off the impeachment inquiry yesterday after
the President mentioned a deal with China might come sooner than everyone
expects. Technically speaking yesterday’s
rally was a substantial win for the bulls with the SPY bouncing off its 50-day
average and the QQQ easily recovery this key psychological level. Now it’s important that we see some followthrough
bullishness or yesterday’s move looks more like a dead cat bounce within an
existing downtrend.
A one day rally does not make a trend, but I must admit it
does raise hopefulness of better days ahead assuming it can hold. Another thing the market could be betting on is
that the impeachment process will bring Congress to a halt. A gridlocked government is often seen as
bullish by the market. The impeachment
of President Clinton kept the Congress busy for about 18 months, and during
that time the market experienced a substantial rally. Will history repeat? Only time will tell so turn off the distracting
political drama news and stay focused on the price action of the charts.
As it turns out my caution of getting caught up and chasing
yesterday gap open proved to be correct, producing a pop and drop pattern at
price resistance levels. The President’s
tough talk on China trade practices at the UN only emboldened the bears pushing
indexes lower with the QQQ suffering the worst of the technical damage unable
to hold it’s 50-day average. Adding
insult to injury Congress began yet another political drama that’s likely to affect
the market well into the future opening an impeachment inquiry of the
President.
During the night trade tensions and political uncertainty had
Asian markets seeing red across the board at the close of trading. Currently, European markets are of a like
mind and decidedly bearish across the board this morning. Not surprisingly US Futures are indicating a
lower open for the market but let’s keep an eye on the SPY & DIA key moving
average supports for a possible area of defense by the bulls. If they fail to hold as did the QQQ the technical
damage could greatly inspire the bears to continue lower. Stay focused and flexible as this news-driven
market continues to challenge traders.
On the Calendar
On the Hump Day Earnings Calendar we just 15 companies reporting
quarterly results. Notable reports
include KBH and FUL.
Action Plan
Tough talk at the United Nations from President Trump shook
the markets yesterday inspired the bulls to move the indexes quickly toward a
test of their 50-day morning averages.
The pop and drop price action left behind some pretty nasty looking
bearish engulfing candles with the QQQ experiencing the worst of the technical damage. Adding insult to injury later in the day it
was announced that Congress opened an inquiry of impeachment against the
President alleging abuse of power.
As the political drama continues to grow it only adds
another layer of what the market hates the most, uncertainty! Unfortunately, that big festering and
stinking pile of uncertainty is likely to continue making this market very
challenging for traders navigate. The
best we can do is stay focused on price, support, resistance, trend, and be
willing to take profits quickly when you have them to avoid the potential whip
of the news story.
The bulls did a good job defending yesterday’s modest gap
down open setting the stage for another possible attack of all-time highs. With several notable earnings reports today and
a reading on Consumer Confidence the bulls may find the inspiration needed breakthrough
the 3000 SPY resistance that has proven so difficult to hold.
Asian markets closed modestly green across the board as
trade uncertainty, and global growth concerns grow. A day after disappointing German economic
numbers European markets are flat to slightly bullish this morning. US Futures appear confidently bullish this morning
suggesting a nearly 100 point gap up to challenge resistance levels once
again. Consider your risk carefully and avoid
chasing gap up entries at or near price resistance levels.
On the Calendar
On the Tuesday Earnings Calendar we have 28 companies fessing
up to quarterly results. Notable
earnings include NKE, NIO, AZO, BB, KMX, CTAS, INFO, JBL and MANU.
Action Plan
Yesterday’s light and chopping price action saw the bulls working to defend the lows of the morning gap down. Index futures held positive throughout the night, suggesting a bullish open and perhaps another attempt by the bulls to attack the all-time market highs. The DIA will first have to deal with the price resistance around 271, and the SPY will have to breach the resistance at 300. The QQQ’s have a considerable amount of work to do before breaking out, but it is bullish that thus far the bulls have successfully defended its 50-day average as support.
A little concerning is that we had safe-haven plays such as Gold,
Silver, defensive sector stocks and even utilities were going up yesterday with
the overall market. Oil stocks continue to recover after the Saudi
oil field attack and yesterday saw a strong push in retail with stocks like
DLTR, TGT, and WMT rising. Currently,
futures point to a bullish open ahead of the Case-Shiller, and Consumer Confidence
reports as well as several notable earnings.
With trade talks scheduled to resume in a couple of weeks and new
tariffs increases scheduled for the 15th of October, markets will continue
to be news sensitive in the days and weeks ahead.
As we approach the end of the 3rd quarter, the index
charts are displaying technical contradictions that reflect the uncertainty faced
by the market. While holding above their
respective 50-day averages the DIA and QQQ have left behind low high failure
patterns, and the SPY is displaying a possible double top failure pattern. The technical contradiction makes for some
very difficult trading decisions in this very news-driven and emotional market.
US Futures open trading Sunday evening quite bullish but faded
as Asian markets struggled with US/China trade developments closing mostly
lower on the day. Weak German economic
data has the European indexes seeing red across the board this morning. US Futures point to a flat to open, and with
little on both the economic or earnings calendars to provide inspiration, expect
political news sensitivity and possible choppy price action.
On the Calendar
To begin the week on the Economic Calendar we have just 16 companies
reporting results but among those stepping up, I can no particularly notable reports.
Action Plan
Although Iran continues to deny the Saudi oil field attack the
President has decided to send troops into the Persian Gulf to bolster the Saudi
Arabian forces as tension continue to grow.
Friday the Chinese negotiations team abruptly cut their visit short, and
then during the night the US Justice Department warned companies that Chinese corporate
theft is rising. Attorney General Adam Hickey
reported that more cases are being open that implicate China for trade secret
theft and that 80% of the economic espionage cases since 2012 involve China.
US Futures opened last night very bullish but have sold-off
and currently indicate a flat to slightly bearish open. With little more than Fed speakers on today’s
economic calendar and no market-moving earnings report, the market will have to
find inspiration elsewhere. Technically the
DIA and QQQ are now showing lower high concerns and the SPY chart displaying an
uncomfortable double top failure forming.
On the bullish side, however, all the indexes remain above their 50-day
moving averages and continue to cling to a current uptrend. As of now the charts seem to reflect the political
uncertainties and difficult trading decisions.
