I think the best description for the price action of late is Pop & Chop. An exciting gap up market open followed by sheer boredom as uncertain bulls and bears milling about waiting for the next tidbit of news hoping for clarity. The FOMC minutes provided no clarity, and now it looks like the best hope for inspiration is the Powell address at 10:00 AM Eastern from Jackson Hole. I would not be at all surprised is we see more of the choppy price action today as we wait.
Asian markets closed mixed overnight as manufacturing data showed a decline putting pressure on the Nikkei. Across the pond European indexes are seeing modest declines across the board in reaction to another US bond yield inversion. Here in the US, futures also point to modestly bearish open ahead of morning earnings reports and the weekly Jobless Claims.
On the Calendar
We have more than 50 companies reporting earnings this Thursday. Among the notable reports are CRM, VMW, GPS,
HPQ, INTU, ROST, DKS, FLWS & CM.
Action Plan
After great earnings results from LOW and TGT gaping the market
higher at the open the price action once again went flat and chopped sideways
the rest of the day. The FOMC minutes release
was a non-event providing no further clarity as to interest rate path forward. Perhaps, Powell’s address in Jackson Hole
Friday morning will provide enough inspiration the shake loose of the summer doldrums.
Once again the US 10-year bond rates have slightly inverted with
the 2-year bond rates, but the market seems to be taking it in stride this morning
lifting off the overnight lows slightly while still pointing to a modestly bearish
open. However, that could easily change
a earnings result roll in, and we get the latest reading on Jobless Claims. Overhead resistance of price and moving-averages
continues to challenge the index charts clearly defining the battlefield of the
bulls and bears. Although price action
has been very challenging, let’s keep in mind the Dow is less than 5% below its
record highs in July, which is a pretty mild correction at this point. Nonetheless its have still been very frustrating,
and I would expect more chop today amid so much uncertainty.
August is traditionally a very challenging month for the market, and so far, AUG19 has certainly lived up to its reputation. Erratic even violent price swings with big overnight gaps have tortured traders trying to make some sense of the uncertainty. Today, markets are hopeful the FOMC minutes will provide some clues as to the thinking of the committee and their next possible rate decision. What we know now is there were three dissenting votes for the rate cut we received last month. The question is, what has changed? Perhaps, we will not get any clarity until Powell speaks in Jackson Hole Friday morning.
Asian markets were mixed and mostly flat overnight as they
also wait for central bank guidance. European
seem much more confident this morning solid bullish price action and green
across the board. US Futures are also
pointing to a bullish open in response to strong earnings results from LOW and
TGT this morning. Be careful not to
chase the opening gap keeping in mind we could easily slip back into consolidation
as we wait for the 2:00 PM minutes release.
On the Calendar
On the Wednesday Earnings Calendar, we have just short of 40 companies
reporting. Notable reports include LOW,
TGT, JWM, SMAR, SNPS & ADI.
Action Plan
After two days of very choppy price action, the market today
is hopeful it can find some clarity as to the thinking fo the FOMC with the
release of last months minutes at 2:00 PM Eastern today. Positive early morning earnings result from
LOW, and TGT has the early morning futures pushing higher to once again challenge
price resistance in the index charts. President
Trump is discussing payroll tax reductions and is pushing with all his might attempting
to pressure the FOMC into a 100 basis point rate cut this month to avoid recession
fears.
We will also have to keep an eye on the Existing Home Sales
number at 10:00 AM Eastern this morning.
The consensus expects housing sales to increase, but this is a potential
market-moving report, particularly if the actual results miss estimates. After the morning rush gap, I would not be at
all surprised to see the market slip back into consolidation as we wait for the
2:00 PM minutes release. After the release
expect an explosion of volatility so be prepared for about anything to occur.
Yesterday’s huge morning gap failed to find follow-through buyers as volatility weary traders choose to sit on their hands searching for clarity to the big issues clouding the path forward. While we could hear of new developments in the trade war at anytime resolution of its uncertainty is likely weeks if months away. Fed Chairman Powell may provide some clarity on the FOMC’s thoughts on interest rates when he speaks on Friday, but until then the market will stay focused on fluctuating bond rates, earnings, and economic reports to try and find inspiration.
Asian markets traded flat but mostly lower as China set new
loan prime rates in an attempt to stimulate economic growth. This morning European markets are trading cautiously
and mostly flat as recession fears continue to linger. US Futures also point to a flat but slightly
lower open this morning as we wait and search for clarity. What comes next is anyone’s guess.
On the Calendar
On the Tuesday Earnings Calendar, we have less than 50
companies reporting today. Notable
reports include CREE, TOL, URBN, HD, KSS, MDT, and TJX.
Action Plan
With markets responding to improving bond rates, the market
gapped strongly higher yesterday but failed to find follow-through buyers as
the market chopped sideways the rest of the day. Traders are finding it difficult to trust the
recent price action with so much uncertainty clouding the path forward. Perhaps yesterday’s price action was a prelude
to a resting consolidation relieving some of the intense volatility of late as
we wait for clarity.
Technically the indexes remain in a downtrend with price
challenged by overhead resistance as well as moving average resistance. Unfortunately, we are unlikely to get much
clarity this week in the trade war, but perhaps the Fed Chairman will help clarify
the FOMC’s next move when he speaks on Friday.
With earnings season winding down the market will turn to economic reports
to try and find inspiration and will likely continue to be very sensitive to
the political spin as it searches for answers.
Choppy consolidating price action, though very boring, maybe just what we
need calm the nerves of traders after a will couple weeks of trading.
With bond yields bouncing and the market suggesting a huge
gap up, open traders face difficult decisions this morning. If the current futures bullishness holds the
DIA, SPY, QQQ, and IWM will gap directly into the price and moving average
resistance. Do you trust price action enough
to risk your capital and hoping for follow-through buying or even a short
squeeze to be triggered? Do you wait to
see if this is a bull trap with the bears ready to defend resistance creating pop
and drop pattern? Or could the morning
gap get no follow-through commitment from the bulls or bears and we to consolidate
the big gap the rest of the day?
Whatever you decide given the wild volatility we have
experienced the last couple of weeks, it will require considerable skills to
navigate the price action successfully. Before
leaping ask yourself these questions. Are
you following your rules? What is your plan if your wrong? Do you have and edge
or are you just gambling your hard-earned money? Do your skills match the current market condition? There are no easy answers in a market full of
news-driven uncertainty and emotion.
There are only difficult decisions to make with such high
volatility. What will you decide?
On the Calendar
On the Earnings Calendar, we have nearly 60 companies reporting on Monday. Notable earnings include WB, EL, & BIDU.
Action Plan
The relief rally that began last Thursday afternoon is
betting a big boost of energy this morning as bond yields bounce and inversion
fears subside. Unfortunately, with the
Dow currently pointing to a gap of more than 200 points, retail traders have a
tough decision to make. A big pop like
this can certainly trigger a short squeeze, but it can also create a nasty pop
and drop if it finds no followthrough buyers.
Indeed a difficult decision with such high price volatility that has
proven to punish both bulls and bears with news-driven reversals.
Even with the big gap up this morning the DIA, SPY, QQQ
& IWM will still be under the Price resistance of the last high and their
respective 50-day moving averages. If
the big morning gap holds throughout the morning, the T2122 will likely signal a
short-term overbought condition at the open.
Make no mistake that does not mean immediate bearishness will resume,
but it does suggest caution and that we should avoid chasing with the fear of
missing out. Buyers could follow-through
to squeezing out short traders, bears could be ready to defend the resistance levels
creating a pop and drop pattern, or we might gap with no commitment from bulls
or bears consolidating the rest of the day.
Your difficult decision awaits.
Lots of questions with very few answers created a very frustrating
day of price action on Thursday. As bond
yields finally began to moderate late afternoon, the market picked a direction
and provided a least a modest relief rally into the close. A good round of earnings reports after the
bell and a bit of bond market stabilization during the night lifted spirits
around the world. The big question for
traders this morning, can we trust this mornings bullishness amidst all the volatility
enough to add risk heading into the weekend still full of uncertainty?
Overnight Asian market closed modestly bullish across the board as bond yield slightly improved. European markets are moving higher this morning after a technical issue delayed the open in the UK. US Futures are solidly bullish this morning with the Dow pointing to a gap up of more than 200 points. Be careful not to chase the open in-case this wildly volatile decides to pop and drop. Also, consider carefully the amount of risk your willing to carry into the weekend.
On the Calendar
We get a little break on the Friday Earnings Calendar with
just 68 companies reporting earnings today with DE as the most notable.
Action Plan
Will, there be real progress on trade negotiations or not? Will the FOMC reduce the rates or not? Will, the Bond Rates, invert and remain
inverted or not? Will China send troops
into Hong Kong to put down the protests or not?
Will the global economic slow down effect the US economy or not? That uncertainty created another very volatile
session on Thursday, and until we get some clarity is likely to continue to create
very difficult price action for traders to navigate.
Yesterday T2122 signaled an oversold condition, but with so
much uncertainty the market struggled until late afternoon when it finally
managed to put together a little relief rally.
A round of good earnings reports after the bell also lifted spirits, and
treasury yields somewhat stabilizing during the night has futures pointing to a
significant gap up this Friday morning.
The question is, can we trust it, or could it produce a pop and drop
pattern or even worse another lower high within the downtrend? Secondly, how
much risk will traders be willing to hold into an uncertain weekend? Nonetheless, any relief rally is a welcome
sight after a week of heavy selling.
Early this morning China announced its tariff retaliation
plan quickly reversing futures markets that had initially indicated a bullishness
throughout most of the night. August is
typically a difficult month with last-minute vacations and the beginning of a
new school year but this year has been particularly challenging with all the
political and economic uncertainty. Sadly,
I think the intense price action volatility is likely to continue into the near
future.
Overnight Asian markets closed mixed but mostly higher even
as China once again lowers their economic growth expectations. However, European markets are decidedly bearish
this morning in reaction to the trade war retaliation from China. US Futures have fluctuated wildly this
morning ahead of several big earnings reports and huge day of market-moving
economic reports. Expect wild price
gyrations today as the market digest all the data.
On the Calendar
We have a major decline in the number of earnings on the
calendar today with just 45 companies reporting. However, we have several market-moving notable
reports which include, WMT, BABA, AMAT, CSIQ, DDS, JCP, NIO, NVDA, and TPR.
Action Plan
I think it’s fair to say that the Trader’s Almanac was certainly
right this year about August offering up challenges. Crossing over the midpoint of August I wish I
could say that the volatility is nearing an end but with all the trade uncertainty
and global market indicators continuing to flash warning signs of recession I
suspect that is not the case. US Futures
most of the night were pointing to a significant rebound from yesterday selloff,
but China put the kibosh on bullishness announcing its tariff retaliation plans
early this morning. Off in the distance,
you can likely see the tweet-storm clouds building.
Today we have a huge day of economic reports for the market
to digest as well as several big earnings reports likely to fuel the fire of
volatility. With futures now indicating
another nasty gap down at the open we should expect the 200-day moving average to
begin pulling very hard on the SPY.
Expect bond yield inversion fear-mongering to continue today as markets react
to China’s tariff retaliation today. The
silver lining in all of this is that great stocks are now at sale prices and
when the selling finally ebbs there will be some fantastic bargains to be
had. Until then, protect your capital,
wait for your edge to return and hold fast to your trading rules that protect
you from emotional decision making.
✨✨✨
NOTE: If you are having trouble logging in to the trading room and
using the Chrome browser, login to your members page on the Hit and Run
Candlesticks website for instructions to resolve the issue. ✨✨✨
Punishing price volatility continues today nearly reversing
yesterday’s sudden and massive rally. The
decision to delay the tariff increase until December 15th suddenly reversed
trapping short traders in one of the fastest moving short squeeze rallies I have
seen in my trading career. Unfortunately,
that didn’t resolve the bond rate inversion that occurred that is once again
punishing those that picked up long positions yesterday.
Asian markets rallied slightly on the tariff increase delay,
but massive protests in Hong Kong dampened the response. Economic data out of Germany raising concerns
of a European recession have their markets seeing red across the board this morning. Still facing significant technical damage and
a bond yield inversion signaling a possible recession in the US, futures are pointing
to a sharp overnight reversal with Dow pointing to a gap down of nearly 250
points. Buckle up as another volatile market
day begins.
On the Calendar
The Wednesday Earnings Calendar is the last big day of
earnings reports this season with more than 250 companies reporting. Notable reports include A, GOOS, CGC, CSCO,
IHRT, LK, M, NTAP & VIPS.
Action Plan
After the Whitehouse decided to wait until December 15th
the market moved up like a rocket has been strapped to its back. Unfortunately, the trade war is not the only
thing the market has on its mind right now, and the rally stopped about as
quickly as it began after running into price resistance around the 50-moving
average. This morning the market must
come to grips with the 2 and 10-year bond rate inversion which occurred as we
slept. Rate inversion is not a perfect
indicator of recession but has accurately signaled it correctly the vast
majority of the time.
Consequently, it looks as if the punishing price volatility will
continue this morning with US Futures pointing to a substantial gap down at the
open. Not helping the matter is that
European markets have also swooned after a German GDP shrank by 1% fanning the
flames of global slow down and recession.
Technically, the indexes continue to have a lot of technical damage to
repair despite yesterday’s rally and the punishing overnight reversals have made
it nearly impossible to trade except for the very experienced day-traders.
✨✨✨ NOTE: If you are having trouble logging in to the trading room and using the Chrome browser, login to your members page on the Hit and Run Candlesticks website for instructions to resolve the issue. ✨✨✨
Yesterday’s slow but steady selloff added to the technical damage of the index charts drawing the first lower high since mid-May. That officially creates at least a short-term downtrend as traders look for safety amidst, fluctuating currencies and bond yields inching toward the dreaded inversion that often signals a coming recession.
Overnight Asian markets closed lower across the board as
protesters fight for greater democracy in Hong Kong, and China threatens
military action. Across the pond, European markets are also
modestly bearish this morning in reaction to all the political turmoil. US Futures currently indicate a flat to slightly
bearish open as traders nervously watch bond rates ahead of the CPI report at
8:30 AM Eastern. With yesterday’s price
action, we can’t rule out the possibility of a test of last weeks lows. However, with market emotions so high anything
is possible, so it would be wise to remain focused and flexible.
On the Calendar
On the Tuesday Earnings Calendar, we have nearly 175 companies reporting results today. Among the notable reports, AAP, EAT, ELAN, JD, TLRY, and YY.
Action Plan
Markets sold off slowly but steadily yesterday as traders
closely watched bond rates that continued to inch closer to the dreaded
inversion that often signals a coming recession. More importantly, the selloff created technical
damage leaving behind a lower high on the daily chart, which indicates the
establishment of a downtrend. Trade war uncertainty,
bond rates, fluctuating currencies, and the massive protests in Hong Kong; it’s
no wonder that traders are looking to protect their capital.
According to reports after the bell yesterday, there was a
problem that affected the markets during the last 50 minutes of trading where
real-time prices were not displayed. How
that may or may not change the look of charts at the open today will be interesting. Currently, futures are once again getting the
morning pump and rallying off overnight lows ahead of earnings reports and the 8:30
AM Eastern CPI report. At this point, we
should not rule out the possibility of a retest of last weeks lows, but with market
emotions so high anything is possible so stay focused on price action and
remain disciplined to your rules.
Growing trade tensions and expanding Hong Kong protests and China
once again lowering the Yuan overnight has the market under some bearish pressure
this morning. Not helping that sentiment
is the fact that Golden Sachs lowered economic growth estimates rising fears of
a recession. If the indexes fail, creating
a price action lower high, the technical damage of the charts could become
severe and officially mark the beginning of a market downtrend. The bulls must defend Friday’s low or expect
the bears to be emboldened pushing the indexes lower once again.
Overnight Asian markets closed mixed but mostly modestly
higher as trade war tensions dampen activity.
European markets currently see modest declines across the board ahead of
the US Market open. As of now, US Futures
suggest a gap down open between 150 and 200 Dow points. Fear could quickly turn to panic selling if Friday’s
lows fail as support. We should continue
to expect high price volatility, intra-day new driven reversals, and big overnight
gaps making the markets very difficult to navigate for swing and position
traders.
On the Calendar
On the Monday earnings calendar, we have just short of 130
companies expected to report earnings today.
Notable reports today include GOLD, SYY, and TME.
Action Plan
Massive protests in Hong Kong continue to grow spilled into
the airport, forcing the cancelation of all flights during the night. The violence is also growing between police
and residents asking for greater democracy and a release from Chinese influence. So as trade tensions between China and the US
grow leader XI Jinping is facing his greatest challenge to his power since
coming into office. Also during the
night China once again lowered the midpoint of the Yuan slightly setting the
currently below Friday’s session lows.
Over the weekend Goldman Sachs cuts their economic growth
forecasts citing the lingering trade war and rising fears of a recession. After a nice afternoon comeback on Friday
that saw indexes recovering the moring session selloff, US Futures are under bearish
pressure this morning. A lower high
failure near the 50-day moving average is likely to embolden the bears and
creates severe technical damage to the index charts. If the bulls are unable to defend Friday’s price
low, panic could trigger a wave strong selling pushing the indexes past last
weeks lows where the SPY and QQQ could test their 200-day averages. Let’s hope the bulls find enough inspiration in
earnings reports to fight hard!
As bond yields inch toward the dreaded inversion and trade
war jousting continues, there is certainly plenty of uncertainty to unsettle the
markets as we head into the weekend. With
most of this earnings season now behind us, the market will now have to confront
its global economic fears directly. Here
in the US jobs numbers remain very strong, and the consumer is still very confident,
but as this trade war lingers on and the two superpowers exchange punches anything
is possible.
Asian markets finished the week mixed but mostly lower after resetting the midpoint of the Yuan just below the key benchmark of seven. European markets are seeing red across the board this morning as political turmoil in Italy has bank price plunging. As we head into the weekend, ahead of earnings reports and the PPI number at 8:30 AM Eastern, US Futures point to bearish threatening to break the 2-day relief rally. It’s been a wild week, and it looks like the volatility will extend right into the weekend.
On the Calendar
On Friday’s Earnings Calendar we get a little break with
just over 100 companies reporting today.
Next week we have just two triple days of reports with the vast majority
of reports this quarter now in the rearview mirror. With mostly small caps reporting today, there
are none that I would consider particularly notable.
Action Plan
Trade war fears are once again raising it’s ugly head this morning
as China now plans to stop receiving US crude imports as its next punch in the
fight. Oil has already declined sharply
as concerns of global growth have spread in recent months if China reduces its
imports oil prices will likely remain under pressure. Another major market concern is the possible yield
curve inversion between the 2 & 10-year bonds often as a signal of recession. With the vast majority of earnings season
behind us, the market will directly confront its overall economic fears in the
coming weeks.
As a result, there is a lot of uncertainty as we head into
the weekend, and traders should carefully consider how much risk they want to carry. With the market very sensitive to bond and
currency fluctuations, anything is possible over the weekend. After 2-days of a relief rally that moved the
indexes up sharply, they will now confront significant price and key moving
average resistance. Currently, US
Futures are pointing to a gap down open of more than 100 Dow points to kick off
Friday’s volatility. I wish you all a
wonderful weekend.
