Wild gaps continue to chop up traders accounts that try to
hold positions overnight. Thursday’s gap
down trapped long traders and those that held short positions overnight will this
morning fell the bite of the trap. I’ve
been warning that for a while that the current market condition favors day
traders has certainly been validated this week.
Now facing an uncertain holiday weekend traders have some
big decision to make. Hold positions into
the weekend rolling the dice for the Tuesday open or close positions to avoid
the risk? I for one choose the latter
and will slide into the weekend with my capital and weekly gains tucked safely away. After the morning rush we could see light and
choppy price action as trader’s head for the door to get an early start to the
weekend. Consider your risk carefully!
On the Calendar
We have a light day on the Earnings Calendar with only 13
companies reporting. Notable reports
include BKE, DXLG, FL, and HIBB.
Action Plan
This morning the futures are pointing to a significant gap which
I am very happy to see but I struggle to understand the bullishness. UK Prime Minister Theresa May resigned this
morning and European markets are responding higher on the news. Perhaps, the US markets see this as a signal
that Brexit will not happen. Yesterday’s
gap trapped those holding long positions and it looks like this morning we will
trap those holding short positions just before the long holiday weekend.
The markets wild movements have certainly confirmed my point
that swing traders have no edge and this is a day traders market. With the big gap up it is entirely possible
that a short squeeze rally could be triggered this morning. It’s also very possible the morning gap finds
no buyers ahead of the long uncertain weekend and a pop and drop pattern is the
result. After the morning rush I would
not be surprised to see the price action become very light and choppy as
traders shut down early to begin their holiday.
Stay focused on price action and consider the risk carefully you carry
into the weekend.
I don’t know about you but I am becoming weary and
frustrated with the daily overnight gaps and this morning we have another big
one. Asian markets closed lower across the
board as the country stepped up their rhetoric increasing trade war tensions and
elevating market fears that this could go on and on. European markets are currently trading in red
across the board as well with their added political uncertainty.
As a result the US futures point to a Dow gap down of more
than 200 points at the open with the tech sector getting hit particularly
hard. As always we must be careful not
to chase the gap but wait patiently to see if sellers support the gap or if
this another bear trap as we’ve experienced several times during this downtrend. With all the overnight gaps and reversal
swing traders have little to no edge and although the price action has been
very challenging it currently favors experienced day traders. Be very careful and remember a big part of a
traders job is to protect your capital and if you have no trading edge then
that becomes job number one!
On the Calendar
On the Earnings Calendar we have over 50 companies reporting
results today. Notable reports include,
BKE, DXLG, FL & HIBB.
Action Plan
Another day another overnight gap and today it’s a doozie as
trade war tensions grow. Over the last
few days there has been a growing hope that the indexes could recover their
50-day moving averages. Unfortunitually,
today’s gap down confirms the failure a raises the odds of a retest of May lows
and the possibility of even a deeper selloff.
The current rhetoric coming from both countries suggests this stalemate in
negotiations could be long-lasting.
As with any large gap be careful not to chase it short. We must be patient making sure sellers
support the gap after the open. This
morning’s move certainly has the potential to create some panic selling so keep
an eye on the VIX if it begins to spike.
In the last couple of weeks we have also seen large morning gaps bring
in the bulls to defend the morning low creating a significant rally. Of course to this point those rallies have
not proved to hold but has it has made this market downtrend particularly
challenging for traders. Day traders
have the upper hand in the current market as the daily reversal gaps make it
nearly impossible for swing traders to have an edge.
No written blog today due to a power outage at my home. I had it almost completed when the power went out for a few minutes and everything was lost. Grrr. 😜
On the Calendar
On the earnings calendar we have several notable reports. They include AAP, CTRP, LOW, NTAP, SCVL, SMRT, TGT, VFC & VIPS.
A 90-day grace period added to the technology ban with
Huawei has the lifted the spirits of the futures market this morning and relieved
some of the strong selling pressure in the NASDAQ. Futures are pointing to more than a 100 point
gap up open in the Dow and the NASDAQ is showing at least a partial recovery of
yesterday’s rout. However there is still
significant technical damage in the charts and with US/China negotiations
stalled, repairing the damage could take some time.
Price action continues to be very challenging with what
seems almost daily overnight reversals and big gaps. Swing traders are likely finding it very
difficult to maintain an edge of any kind as the volatility favors the quick in
out of day trading avoiding the overnight risk.
Remember don’t fight the market and don’t trade just to have something
to do. Remain disciplined to your
trading plan and profit your capital until your edge returns.
On the Calendar
On the Earnings Calendar we have more than 70 companies
reporting with a big emphasis in retail for the rest of the week. Among the notables today, KSS, JWN, CRMT, EV,
HD, JCP, TJX, TOL and URBN,
Action Plan
After the close yesterday a 90 day grace period was added to
the Huawei blacklisting to relieve some pressure on the US tech companies. This exemption allows Googe to send software updates
to Huawei phones which use its Android operating system through August 19th. As a result NASDAQ futures are recovering substantially
this morning and lifting the spirits of the other major indexes as well.
Unfortunitually the divide between the US and China trade
negotiations seems to have grown and according to reports the trade war could
get worse before it gets better. Despite
that US futures are pointing to a positive open this morning but keep in mind
there is still significant technical damage in the charts that will likely take
some time to repair. The overnight reversals
and volatility continue to favor the very nimble day traders and making it
challenging for swing traders to matain an edge of any kind.
Stalled US/China trade negotiations continue to ripple around
the world as the nervous tensions grow amidst the uncertainty of it all. After the blacklisting of Huawei’s devices,
Google has suspended business activity with the Chinese device maker essentially
blocking it from global growth and inflaming already difficult negotiations
between the countries.
Tensions are also on the rise with Iran with the president’s
warning of the end of Iran if they raise arms against the US. As John Wayne would say, they’s fightin’ words! Hopefully cooler heads will prevail but once
again the uncertainty is not something the market likes so keep an eye on the
VIX if fear begins to grow. A failure at
the 50-day average in the index chart creates significant technical and psychological
damage that can take weeks if not months to repair. Choose your risk carefully.
On the Calendar
On the Earnings calendar we have 80 companies expected to
fess up to results. Notable earnings
include IGT, TTM & TI.
Action Plan
Futures that initially pushed higher by nearly 120 points in
early trading reversed overnight as trade war tensions continue and saber
rattling with Iran grew over the weekend.
Potentially damaging technical price patterns let behind on Friday’
index charts could bring out the bear this morning unless there is something
that can inspire the bulls in the lead up to today’s open.
Unfortunately there is nothing on the economic calendar to inspire
and although there are some notable earnings reports today they are unlikely to
market moving events. That means the
market will likely be very sensitive to news reports and tweets today opening
the door to volatile price action. Remember
is unwise to chaise a gap so let’s wait and see if sellers come in to support
the gap before making any new trade decisions.
Having reaped the benefits of a nice relief rally traders
will have to consider the weekend risk of the trade war news and the rising tensions
with Iran. Futures are currently
pointing to a bearish open with the Dow currently expected to open about 100 points
lower.
With a light day on both the earnings and economic calendars
traders will have plenty of ponder the technical damage in index charts as this
volatile week comes to the close. Yesterday
afternoon I began to lighten up by taking profits to reduce risk and hedging
positions that I plan to hold. Consider carefully
how best to protect your capital in light of the tensions, possible volatility that
can emerge over the weekend.
On the Calendar
As usual we get a little break on the Earnings Calendar Friday
with only 13 companies today. Notable earnings
include DE & RDY.
Action Plan
After a big rally to test key resistance levels futures are
pointing to some profit-taking at the open this morning. With a light day on the earnings calendar and
the economic calendar the market will have to ponder the technical damage in
the charts as we move toward the weekend.
Tensions with Iran have grown to such an extent that the Whitehouse has
deemed it time to inform Congress.
Hopefully cooler heads prevail but traders should consider the
weekend risk if a military confrontation were to occur let alone the slings and
arrows tossed back and forth in the trade war.
Currently futures point to more than a 100-point gap down. If that holds the open watch closely to see
if sellers support the gap before considering short positions. However, if the sellers do being to pile on
reducing risk into the weekend fear could quickly grow and selling could
quickly accelerate.
Do we dare hope for a bullish follow-through this morning? Although
a presidential executive order seems to have raised trade war tensions markets are
putting on a brave face this morning. Following
a rather volatile session Asian market closed mixed but modestly higher overnight. European are currently green across the board
and US Futures point to a bullish open in the pre-market.
The world largest retailer, WMT, has already reported better
than expected to give the futures a nice bump but we have three potential market-moving
economic reports at 8:30 AM Eastern for the market to digest before the
open. Keep a close eye on price action
and remember we have important resistance levels just above that the bears
could defend. As for me I do dare to
hope for follow-through bullishness but I will patiently wait until I see proof
the bulls have the energy to deal with resistance before considering new risk.
On the Calendar
We have a lighter day on the Earnings Calendar but we have
some heavy hitters that could move the market.
Notable reports include, WMT, NVDA, AINV, AMAT, BIDU, BOOT, FRO, IQ,
LTM, MANU, NGG & WIX.
Action Plan
We had a nice steady rally yesterday following a gap down
open as the market reacted to trade tensions and declining retail sales figures. After the bell yesterday the president signed
an executive order that allows the federal government to block transactions
that involve information or communications technology citing National Security
concerns. China sees this as a direct assault
on the mobile device seller Huawei adding additional pressure to trade negotiations.
Despite that, futures are currently pointing bullish open. Dare we hope for a day of follow-through? Keep in mind we have some big earnings reports
today that could move the market as well as three potential market-moving economic
reports at 8:30 AM Eastern. If the pre-market
bullishness holds into the open remember to watch closely key resistance levels
where the bears could reassert themselves.
A gap into resistance raises the risk of a pop and drop so keep a close
eye on the price action and avoid chasing the open.
Yesterday broad-based rally left me hopeful that we might
see at least a little follow-through bullishness this morning. Futures during the night showed some promise
of that as Asian markets rallied closing up across the board. Unfortunately that bullishness has faded this
morning ahead of a big day of earnings reports and economic reports.
Although there was some sweet relief yesterday from the
selling pressure so much technical damage was created on Monday prices now face
some pretty tough resistance levels if the rally is to continue. Perhaps this mornings data deluge and provide
the energy need to inspire the bulls higher. As you plan your risk forward however it would
be wise to remember that it’s not uncommon for prices to retest market lows at
some point. Remember the current trend
is still down and how the market deals with resistance levels will be very
important as we move forward.
On the Calendar
A busy day on the Earnings Calendar with nearly 190
companies reporting. Notable reports
BABA, CSCO, ERJ, FLO, JACK, M, NTES & TCEHY.
Action Plan
Yesterday’s relief rally appears to have been very broad-based
with many sectors involved in the recovery.
Unfortunitually Monday’s selling created so much technical damage in
charts they now face some pretty strong price resistance levels. We also have a very big day of earnings and an
economic calendar full of potential market move reports for the market to chew
on this morning.
Futures reopened last night bearish but then turned bullish
as Asian markets found the energy to recover but that warn and fuzzy feeling has
now slipped away. As I write this note futures
are pointing to a gap down of more than 50 points but that could quickly change
as earnings and economic data rolls out.
Keep a close eye on overhead resistance levels and remember that market
bottoms often require a retest of previous supports so plan your risk
carefully.
US futures are pointing to a triple point gap up but is this
a relief rally or the setup for a pop and drop pattern? Only time will tell but be careful not to get
caught in fear of missing out rushing into danger. There was wise spread technical damage
created in most sectors of the market yesterday so keep an eye on those price
resistance levels if the bulls do choose to test them.
Though the market may have created a short-term oversold
condition with yesterdays aggressive sell-off the trade war is likely to have
lasting impacts so don’t expect the bears to give up easily. The market is likely to remain volatile, sensitive
to tweets and news reports so plan your risk carefully. The current market condition is likely to be
challenging to even the most experienced traders so there is no need to rush into
harm’s way, remain disciplined to your rules and wait for your edge to return even
if this is a relief rally.
On the Calendar
We have nearly 170 companies on the Earnings Calendar
expected to report results. Among the
notable reports, BABA, PLCE, CSCO, ERJ, FLO, JACK, M, NTES & TCEHY
Action Plan
After taking considerable time to look over 1000’s of charts
last night, yesterday’s rout created significant technical damage across most
sectors. Consumer defensive stocks, utilities,
precious metals fared the best as traders and investors looked to find some
safe havens. Futures are pointing to a
triple-digit gap up but it would not be wise to rush in the morning gap. The bears are unlikely to give up easily and
we will have to watch the possibility of a pop and drop pattern.
Price action is likely to remain fast, volatile and very challenging
even to the most experienced traders. For
the time being this is a very emotional and news-driven market subject to intra-day
and overnight reversals so plan your risk carefully. Due to the heightened volatility, if I do
trade, I will take smaller than normal positions and expect to take profits without
hesitation to reduce the risk of reversal.
Stay disciplined to your rules and patiently wait for technical correct
patterns that provide you with a higher probability edge.
The US tariffs increased by 25% and we are still waiting the
Chinese promised response as trade negotiations continue in Washington D.
C. Asian markets closed mixed but mostly
higher overnight and European markets are also in rally mode this morning and
green across the board. US futures fluctuated
substantially overnight but as we move toward the open hope of a deal continues
to well up.
This week has created significant technical damage in the
charts and its very difficult to know what to do as we wait for negotiations to
conclude and the Chinese response to the tariff increase. While the trade talks are front and center we
also have to consider the rising tensions with North Korea and Iran as we
consider the weekend risk.
On the Calendar
We have a little rest on the Earnings Calendar with just short
of 120 companies reporting today. Notable
reports include DS, ENB, JD, MAR & VIAB.
Acton Plan
As US/China negotiations continue in Washington D.C. the
president did as he said and raised tariffs by 25%. At this time China has yet to respond but
promises that it will do so with equal tariffs on US products. During the night futures were all over the map
swing from up more than 100 points to down nearly 100 points as we neared the
midnight deadline.
This morning the futures are suggesting a mixed and modest
open but that could easily change as earnings reports roll in and we get the
latest reading on the CPI at 8:30 AM Eastern.
With the current technical damage and waiting for China’s response it’s
very difficult to access the risk of holding or adding new position ahead of
the weekend. The trade war may be the
least of our worries as issues in North Korea and Iran continue to escalate. Plan your risk carefully and have a wonderful
weekend everyone!.
