Resistance

While the DIA and SPY continue to hover just below around all-time high resistance levels, yesterday’s price action left more concern rather than confidence by the end of the day.  Technically speaking the current trends in major indexes remain bullish even though the resistance above has proven to be difficult to penetrate thus far.  With very little on the earnings or economic calendars today the market may struggle to find inspiration as we head into a weekend that could include retaliation for the Saudi oil field attacks.

Asian markets closed the week mixed but mostly higher as low-level trade talks begin.  European indexes are modestly green across the board this morning, and the US Futures currently point to modest gains at the open.  With contradictory candle signals, trends and all-time resistance levels just above ahead of an uncertain weekend anything is possible.  Plan your weekend risk carefully.

On the Calendar

On the Friday Earnings Calendar, we have just four companies reporting results today.  I see no particularly notable reports today.

Action Plan

Vice President Mike Pence is now publicly calling the attack on Saudi oil fields as an act of war.  According to reports, President Trump will be briefed on retaliation options in the next couple days.  What comes next is anyone’s guess?  The President has also granted a few more tariff exemptions as US and China move into low-level talks.

 Although the indexes were unable to sustain yesterdays rally the DIA and SPY continue to hover around all-time high resistance levels.  Current trends are clearly bullish, but yesterday’s price action was not exactly confidence inspiring by the end of the day.  As we head into a weekend with trade talks and a possible retaliatory response on the oil fields it will be interesting to see how much risk traders will be willing to hold.  With only Fed Speakers on the Economic Calendar and no notable earnings reports today, the market will have to search or inspiration elsewhere.  Plan your risk carefully and have a wonderful weekend!

Trade Wisely,

Doug

A bit Disappointed.

A bit Disappointed

After cutting rates for the second time, the market seems a bit disappointed this morning the, FOMC didn’t clearly signal more rate cuts this year.  With Powell pointing to strong US economic indicators and with three dissenting committee members on this cut, the path to future reductions looks challenging.  During the night the BOJ held current rates, and this morning the Bank of England did the same.  Unfortunately, there is still plenty of uncertainty with a possible Iran retaliation action, Brexit, US/China trade talks & scheduled tariff increases to make the weeks ahead challenging.

Asian markets closed mixed but mostly higher with Hong Kong markets continuing to slide south as the unrest in the country continues.  This morning European markets are all modestly higher after the BOE decision to stand fast on interest rates.  US Futures point to modest declines at the open ahead of a busy morning on the economic calendar of possible market-moving reports.  Keep your seat belt fastened the road ahead could still be very challenging to navigate.

On the Calendar

On the Thursday earnings calendar, we have just 11 companies reporting results with DRI as one of the most notable on the day.

Action Plan

Evidence is growing from the remnants of the drones and cruise missiles used in the Saudi oil fields attack that Iran is the culprit.  Saudi Arabia will present its evidence to the United Nations and framing the incident as a global community threat.  The President has ordered much tougher sanctions against Iran but to this point has shown constraint for a military confrontation.  A day after the FOMC decision US Futures point to a modestly lower open seemingly disappointed with the FOMC decision.

During the evening the Bank of Japan choose to hold rates steady, and this morning Bank of England decided to stand pat on interest rates even as Brexit uncertainty grows.  With that now out of the way the market will likely focus on the coming US/China trade talks early next month, the issues surrounding the intensifying Brexit decision, as well as the coming 4th quarter earnings.  A possible retaliation attack on Iran remains a wild card that could upset the applecart in the short-term. 

Trade Wisely,

Doug

Focused on the Fed.

Jerome Powell is in the unenviable position of being criticized no matter what he does today as the entire world is focused on the Fed rate decision at 2:00 PM Eastern today.  Choose to cut the rates a little and market could be disappointed, and Whitehouse tweet barrage will begin.  There will likely be criticism within the committee as at least 2-dissenting votes expected to occur suggesting he has bowed to the market.  As traders, no matter what the FOMC does, our job is to set aside the bias and trade the chart following our trading plan rules. 

Overnight Asian markets closed mixed overall pretty flat on the day as they wait for the FOMC decision.  European indexes are however seeing green across the board but only holding very modest gains as they wait.  US Futures ahead Housing and Oil Supply numbers point to a flat to slightly bearish open.  After the morning rush, I expect very slow and choppy price action until the Fed decision.  After that anything is possible, so plan your risk very carefully.

On the Calendar

On the hump day earnings calendar, we have just 11 companies reporting results.  GIS is the notable report on the day.

Action Plan

Oil prices moderated yesterday when Saudi Arabia said they have largely restored oil production and should be back to full capacity by the end of the month.  Benjamin Netanyahu’s attempt at a 5th term as Prime Minister is struggling this morning as the election is said to be to close to call.  It would seem political uncertainty is a worldwide theme these days.  Today is all about the FOMC and whether they will or won’t or how much they choose to adjust the interest rates.  No matter what Powell will have to face criticism.  Cut the rates, and it’s likely there will be at least 2-dissenting votes cast on the committee.  Don’t cut the rates enough and expect a barrage of disapproval tweets from the Whitehouse. 

No matter what you think or want to happen; as traders, the best we can do is stick to our rules, set aside our bias and trade the chart.  We will all know the answer at 2:00 PM Eastern and all the media spin before that is speculation and distracting noise.  Currently, US Futures point to flat to slightly bearish open where we can expect choppy price action until the rate decision is released.  After that, all bets are off, and anything is possible.  If the market embraces the decision new, record market highs look possible.  Disappoint the market, and the index charts could easily begin to show topping patterns.  Hang on it could be a wild day!

Trade Wisely,

Doug

Big one-day increase.

One of the biggest one-day increase in oil prices in 30 years but the overall market seemed to take the blow in stride only losing about half of one percent on the day.  Rising domestic production decreasing our dependence on foreign crude likely played a significant role in the muted market reaction.  Another might be the no-rush response to retaliation of those responsible for the attack.  Last but not least is the hopefulness that the FOMC will lower interest rates on Wednesday afternoon.  The question rattling around in my head is what happens if the FOMC disappoints due to the rather strong US economic data? 

The rising geopolitical concerns and rising energy prices led to Asian markets closed mixed with the Hong Kong exchange suffering the biggest decline.  Across the pond European are also cautious this morning trading mixed but modestly lower overall.  With the FOMC kicking of their 2-day meeting today and ahead of Industrial Production number the US Futures points to a modestly lower open and what could be another very choppy price action day as we wait for the Fed decision.

On the Calendar

We have 22 companies stepping up to report today according to the Earnings Calendar.  Notable reports include FDX, CHWY, ADBE, & CBRL.

Action Plan

Although the oil made it’s biggest one day spike in nearly 30 years, the overall market barely flinched only falling about half a percent overall.  While evidence mounts that the oil field attacks came from Iran, the President is exercising patience on retaliation as investigations continue.  With US energy production so high nowadays we have decreased dependence on Saudi oil, but the other factor for a muted market reaction is the pending FOMC announcement on Wednesday afternoon.  Although fed fund futures have recently decreased the odds of a rate cut slightly but as of yesterday, the probability remains at 26% of an FOMC accommodation. 

Ahead of the open US Futures are pointing to a modest decline as the FOMC begins its 2-day meeting.  We have Industrial Production numbers at 9:15 and Housing Market Index reports on the economic calendar and after the bell earings from FDX and ADBE that could move the market.  Although there could be a news-driven event that creates some price volatility, I’m largely expected a light and choppy day as the market waits on the Fed decision. 

Trade Wisely,

Doug

Crude Prices Rise

Crude Prices Rise

Crude prices rise sharply after Iranian attacks on Saudi oil fields forced the shut down of nearly 50% of their daily production.  The President has authorized the opening of the US Strategic supplies in response.  The UAW has officially placed 48,000 General Motors on strike, but negotiations are set to resume this week.  What a difference a weekend can make!  With the market hopeful of FOMC rate decision and forecasts on Wednesday afternoon and the weekend disruptions, we should prepare a bit more price volatility in the days ahead.

Overnight Asian markets closed mostly lower as higher oil prices could pressure and the already challenged Chinese economy.  European markets are seeing red across the board in reaction to oil prices and the obvious geopolitical tensions it’s likely to occur.  US Futures had bounced slightly off of overnight lows pointing to a gap down open.  One has to wonder what comes next as a response to the attack on world energy supplies?

On the Calendar

Although were nearing the end of the quarter we still have stragglers yet to report.  Today we have 21 companies expected to report but is see none that are particularly notable.

Action Plan

Iranian attacks on Saudi Arabian oil fields wiped out 5% of the global supply and forced the shutdown of nearly 50% of their daily production.  Not surprisingly crude price rose sharply as futures markets reopened.  What’s more, unsettling is what comes next?  Disrupt the supply of energy, and a significant military response is not likely far behind.  Aerospace and Defense sector stocks may join in the rally with oil prices.  Tuesday begins the 2-day FOMO meeting with their announcement on rates and forecasts at 2:00 PM Eastern Wednesday. 

Typically the market tends to chop with lighter than normal volume ahead of an FOMC announcement but, normal may be difficult to achieve today with the new uncertainty of energy.  US Futures have improved from overnight lows but continue to point lower this morning with the Dow expected to gap down about 100 points.  Keep in mind the 8-day rally has put the indexes in a short-term overbought condition with 50-moving average support significantly lower so we should not rule out the possibility of a test.  However the hopefulness of lowered interest rates could inspire the bull to hold firm.

Trade Wisely,

Doug

Interim deal, Maybe?

Interim deal

The ECB delivered as expected, and the President said he is willing to consider an interim trade deal adding rocket fuel an already extended rally lifting the SPY temporarily to a new record high print.  After 8-days up it hard to be a buyer but the bulls are working hard this morning suggesting more than a 100 point Dow gap and possibly secure more records before the weekend.  With the FOMC expected to deliver even more stimulus next Wednesday the momentum remains firmly with the bulls.

Overnight Asian markets closed with green across the board with growing optimism of a trade deal.  European markets are mostly bullish this morning after the aggressive ECB move even as worry of a German recession grows.  The US Futures point to another triple point gap up in the Dow on its 8th day of rally that has recovered nearly 1400 points.  Consider the risk carefully you carry into the weekend as this rally become very extended.

On the Calendar

On the Friday Earnings Calendar, we have just 11 companies reporting results.  Looking through the list I can find none that are particularly notable.

Action Plan

Although there was some light selling as we moved into yesterdays close the bull, remain solidly in control with relentless upside pressure.  Having said that with the indexes up 8-days in a row and looking to extend that streak this morning, I don’t see this as a buying opportunity.  Heading into the weekend with a gap up open on Friday seems more a profit-taking rather than a day to add risk. 

Our T2122 indicator is flashing an extreme over-bought short-term condition, but I wouldn’t bet on a selloff until we see something in the price action that suggests the bears are willing to fight back.  That could begin today, but with the bullish momentum and an FOMC expected to provide more stimulus I wouldn’t be surprised if the bears have already taken the rest of week off.  Have a wonderful weekend everyone!

Trade Wisely,

Doug

Melt-up

Melt-up

The huge Institutional rotation into value plays created an amazing melt-up in index prices yesterday.  Traders can witness this massive shift with a quick study of value ETF’s that have moved up so quickly they are nearly parabolic.  Adding fuel to the fire is the expected ECB stimulus package and the likely accommodative FOMC decision next Wednesday.  Toss in the Trump tariff delay from Oct. 1 to the 15 in what he called a goodwill gesture, and we have the recipe for new record highs in the indexes.  I would be careful chasing this rally at this point considering the Dow has already rallied more than 1100 points in just 7-days of trading.

Asian markets mostly rallied on the Trump tariff delay news but continue trouble in Hong Kong kept the HSI in the red at the close of trading.  European indexes have reversed earlier gains on fears of a German recession even as the ECB is expected to make an accommodative decision today.  Undeterred by European concerns the US Futures point to yet another gap up open to challenge the all-time high resistance levels in the DIA, SPY, and QQQ.

On the Calendar

The Thursday Earnings Calendar indicates that 25 companies are confessing their quarterly results.  Notable reports include KR, AVGO & DLTH.

Action Plan

An amazing rally yesterday as the indexes relentlessly marched higher.  To put this extraordinary rally into perspective, the Dow has gained more than 1100 points in just 7-days or trading.  A big portion of the rally seems have occurred in a huge institutional rotation into value plays that happen to be heavier weighted in the indexes.  Also, there appears to be a substantial rotation out of safety plays, such as precious metals and bonds into stock value plays. 

One reason for this is the expectation that ECB and the FOMC will both provide a monetary backstop to fears of slowing world economies.  The president in what he called a goodwill gesture in delayed the tariffs that were scheduled to increase on October 1 to the 15th of the month.  As a result this short-term over-extended market is pointing to further extension this morning.  The tariff extension, continued institutional rotation, and the likely ECB stimulus package expected today could easily inspire the bulls to set new record highs in the market.  I would, however, caution traders to be careful not to chase this rally after so many days up.  Profit-taking could begin at any time so keep a watchful eye on price signals.

Trade Wisely,

Doug

September 11th

September 11th

Today we remember one of the most tragic days in US history, September 11th, 2001, where nearly 3000 fellow citizens died.  First responders that give their lives that day will be honored this morning at the market open with the ringing of the bell.  We are also waiting to see if the ECB will provide a stimulus package and the latest reading of the Producer Price Index.  The bulls and bears continue to battle in a very tight and challenging to trade chop.  Perhaps the market can find some inspiration from the ECB today, or perhaps we continue to chop as we wait on the FOMC next Wednesday.

Asian markets closed mixed waiting on the ECB, and Apple suppliers rallied on the unveiling of their new product yesterday.  European markets are green across the board this morning in anticipation of their central bank decision.  The US Futures point to a modestly higher open waiting on the ECB.  There is something about the smell of freshly printed money that the bulls can’t get enough of and just maybe the ECB will score them the fix they desire.

On the Calendar

The hump day Earnings Calendar has 24 companies expected to report results.  ACB & TRLD are among the notable reports today.

Action Plan

As we remember and honor the nearly 3000 Americans that died on September 11th 2001 we wait to hear from the ECB and a possible stimulus package.  There is not much that the market loves more than the smell of freshly printed money.  It’s a little like a heroin addict that knows the drug is not good for them, but the immediate gratification of the next high outweighs the long-term effects.  The damaging effects of debt no longer appears to matter as long as the market continues to go up in the short-term.  The President agrees tweeting just a few minutes ago, “Fed boneheads’ should cut interest rates to zero ‘or less,’ US should refinance debt.”  Wow!

US Futures point to a slightly higher open this morning as we wait on the ECB and ahead of PPI numbers at 8:30 AM Eastern that is expected to decline according to consensus estimates.  Although indexes continue to show signs of short-term overbought conditions the bulls currently seem determined to attack all-time highs and a stimulus package could be just the inspiration to get it done.  However, we could also see more choppy price action as we wait for the FOMC to chime in on interest rates next Wednesday.  An institutional rotation seems to be underway with risk coming out to defensive assets and rolling into value plays such as financials and energy. 

Trade Wisely,

Doug

Frustrated?

Frustrated

Are you frustrated with the current price action, overnight gaps and go nowhere choppy days?  Do you feel as if your missing out and feeling the pressure to trade not wanting to miss out on your share?  Believe me; you are not alone!  I speak with may traders every day that share the same frustration with this uncertain news-driven market.  Those that succumb to the emotion of missing out have and continue to suffer significant losses while traders standing aside waiting for their edge to return are equally frustrated by the market condition but retain their capital as they wait.

Are you holding onto an edge, or are you trading on emotion and finding your account suffering as a result?  The choice is yours.  You are the CEO of your trading business.  The buck stops with you!  It’s perfectly okay to feel frustrated with the current condition of the market and the wild price action.  That’s normal, but if you’re giving up your trading edge and allowing your emotion or sheer boredom to guide your trading your capital and your confidence will both disappear very quickly.  Make your choice!

On the Calendar

We have just 14 companies on the Earnings Calendar to fess up to quarterly results.  Notable reports today include GME, PLAY, RH & ZS.

Action Plan

Choppy consolidation consumed the vast majority of yesterdays price action.  However, it would seem there is an institutional rotation underway selling-off market leaders and picking up value plays.  The rotation also appears very targeted into heavily weighted index names that have significant impacts on overall index valuation.  Overnight Britain’s Prime Minister failed in his attempt to force a new vote on Brexit creating a stalemate with Parliament as the deadline nears.  Forty-Eight states have joined an antitrust investigation into GOOG while 11 states have joined in antitrust investigations into FB.  Big Tech is also under federal antitrust scrutiny as AAPL, FB, GOOG & AMZN come under fire.

US Futures rallied off overnight lows currently pointing to modestly lower open.  We have the APPL dog and pony show this morning as they unveil there new iPhone line up so expect some volatility in the stock.  I would not be surprised to see continued choppy price action as the market waits and hopes on as ECB stimulus package later this week and the FOMC decision Wednesday the 16th.  Of course, any is possible in this emotional and news-driven market, so plan your risk carefully.

Trade Wisely,

Doug

Asking for US help.

Hong Kong citizens ask for US help to gain their freedom while China directly accuses members of Congress of inciting new violent riots that resumed last night.  How will this affect the scheduled US/China trade talks next month?  The Taliban issued a direct threat to US lives after the President abruptly canceled peace talks, and Afghanistan is said to be bracing for violence.  The British Prime Minister is once again attempting to force a vote on Brexit today while at the same time a new Parliamentary bill to block the action is supposed to go into effect today as well.  With all this in play the bulls are pushing for another gap up open continuing to stretch toward all-time highs.

Overnight Asian markets closed mixed but mostly higher as Hong Kong protests flair up and Chinese exports unexpectedly decline.  European markets are also mixed but mostly lower at this hour as the Brexit battle continues and hoping for an ECB stimulus action.  US Futures point to another gap up open ahead of a light day of earnings reports and a quiet economic calendar.  I would not rule out the possible pop and drop, and I would also not be surprised to see the bulls try very hard to keep the momentum marching higher.

On the Calendar

The Monday Earnings Calendar expects 25 companies to fess up to quarterly results today.  The notable report of the day is CTRP.

Action Plan

The US pulls out of peace talks with the Taliban this weekend and violent protests once again break out in the streets of Hong Kong.  While Hong Kong asks for US help to gain freedom, China is directly accusing members of Congress for encouraging the riots.  One would rationally assume that could be a major stumbling block to the scheduled trade talks scheduled next month. 

Whether focused on the hopefulness of a future rate cut or the sheer momentum of the current rally, the US Futures point to a bullish open.  In the UK, Prime Minister Boris Johnson is once again trying to force a vote for a no-deal Brexit while at the same time Parliament’s new bill to block such an action goes into effect today.  How all the uncertainty warrants the US markets rallying toward record highs in the light of declining job increases makes little sense.  T2122 suggest we are at or very near a short-term overbought condition, so watch the possible pop and drop but don’t ignore the bullish momentum as this all or nothing emotional trading continues.

Trade Wisely,

Doug