Dow testing 25,000

Testing 25,000

Good earnings and a wait and see FOMC inspired a bullish surge propelling the DOW upward, testing 25,000, a key psychological level for the index.  The question now is will it hold as resistance or can the bull continue to defy gravity, fueled by earnings results and momentum.  Today we have over 140 companies reporting and big economic reports for the market to decipher.

Asian markets closed higher across the board last night reacting to the rate decision by the FOMC.  European markets are also bullish this morning, but US futures seem to be taking more of a wait and see approach showing the possibility of a flat to a mixed open as I write this.  Currently, price action in the charts shows no sign of profit-taking, but after such a steep rally it should be no surprise if a pullback begins at any time.  This has been a fantastic market run so remember to take some profits and have a plan if the market happens to shift south. 

On the Calendar

Today on the Earnings Calendar we have 142 companies reporting earnings.  Some are the notable are AMZN, MO, COP, DECK, DWDP, GE, HSY, MCK, SHW, TSCO & VLO.

Action Plan

An outstanding day yesterday as earnings and the FOMC inspire the bull to rally the Dow 434.90 points higher at the close.  Both AAPL and MSFT, tech bellwethers, beat on the top line by a penny this week with one moving higher and the other lower.  Today after the bell we have the retail giant AMZN reporting with a slew of other reports to keep traders guessing and on their toes as to what happens next.

The question now in my mind after such a huge run up the last few weeks how much longer can this continue?  The T2122 indicator seems stretched to its limit suggesting we should be cautious that a pullback could begin at any time.  However, earnings and shear bullish momentum can continue to carry the market higher as long a nothing stumbles.  The Dow is once again testing 25,000 which has served as a key psychological level for the market.  The question now is will it serve as resistance or can it break-through and once again serve as support.  The current price action shows no clues of profit-taking just yet so stay long, but, I think it would be wise to prepare for the possibility. 

Trade Wisely,

Doug

Volatility Trifecta

Earnings reports, FOMC rate decision and the US/Trade negotiation tensions as talks resume today offer the market a volatility trifecta to navigate.  Both Asian and European markets show mixed results ahead of US/China trade talks, but the US Futures are bullish across the board on the heels of AAPL earnings.  After the bell today MSFT will weigh its earnings results along with several other notable reports to keep traders on their toes.

Fast price action and volatility can be expected at the open today as the market responds to earnings and economic news but don’t be surprised if it slows down and becomes choppy as we wait for the Fed decision at 2 PM.  As price tests, resistance levels keep an eye out for whipsaws and the possibility of reversal patterns.  There is so much on the markets plate today anything is possible so set aside bias and focus on the price action.  Buckle up; it could be a bumpy ride!

On the Calendar

calendar

On the Earnings Calendar, we have 137 companies reporting with notable reports from MCD, BABA, T, FB, MSFT, PYPL, QCOM, TSLA, WYNN and many more.

Action Plan

AAPL squeaked past its earnings report betting lowered estimates by a single penny.  The good news is that was enough to please investors lifting the stock more than $8 per share in after-hours trading.  We have another big day of earnings with the tech bellwether, MSFT reporting after the bell today.  Also this afternoon at 2 PM Eastern we have the FOMC rate decision weighing the mind of the market.  If that’s not enough to complicate the price action toss in the tensions of the US/China Trade negotiations that resume today.

Currently, US Futures are bullish across the board which is interesting due to Asian stocks closing mixed but mostly lower and European markets also currently mixed.  I would expect some fast price action this morning as the market reacts to earnings and early economic reports such as the ADP and GDP.  However, don’t be surprised if the market quiets down and price action becomes choppy as we wait for the Fed decision and the chairman’s press conference.  The current market condition is more suited to day traders rather than swing & and position traders with so much market-moving news. 

Trade Wisely,

Doug

Bulls defend

Bulls defend

As harsh as the selling might have felt during the morning session but thus far the bulls defended index 50-day average supports.  A very good sign but with so many big earnings reports rolling our this week we should expect more volatility over the next couple of weeks with both bullish and bearish surprises. 

Earnings season normally produces significant overnight market gaps adding complexity to your trading decisions.  New US/China trade tensions and newly imposed sanctions on Venezuela also adding stumbling blocks effecting price action volatility.  Keep in mind the tech bellwether AAPL reports after the bell today opening the door for a Wednesday market gap.  Clearly, there is a lot to consider as we plan our risk in the day ahead.  Be careful not to over-commit and stay focused on price action.

On the Calendar

calendar

On the Earnings Calendar, we have 112 companies reporting today.  There are more notable reports today than I can list here but keep in AAPL, AMD and EBAY report after the bell today.

Action Plan

After a steep decline during the morning session, the bulls went to work showing a willingness to defend the 50-day average support of the indexes.  A good sign but the real test will be after the market bellwether AAPL reports after the bell this afternoon.  Currently, futures are suggesting a modest decline this morning, but with so many earnings reports before the bell, I would expect something very different by the open.

New tensions this morning as US and Russia impose sanctions on Venezuela and new tensions on the US/ China trade negotiations as the US files criminal charges on the china mobile device maker Huawei.  Keep in mind that the FOMC meeting begins today which will culminate with their rate decision Wednesday afternoon.  AAPL’s earnings report will set the stage for a flurry of big tech reports this week.  Unfortunately, most of them will report aftermarket close which sets the stage for significant market gaps the next morning.  Consider the gap risk as your plan ahead and expect considerable price action volatility. 

Trade Wisely,

Doug

Perfect Storm?

Perfect Storm

A big week of heavyweight earnings, big economic reports, and the FOMC rate decision the conditions are right for the perfect storm for high volatility.  With prices testing the long-term downtrend resistance and the short term trend up and appearing overextended it’s unwise to ignore the possibility of a selloff.  There at a lot of clues pointing to caution.  However, the direction will likely come down to earnings results and the FOMC decision. 

Because many of the Tech heavyweights report after the market closes, we should also expect the possibility of overnight reversal gaps and plan our risk accordingly.  Asian markets closed mixed but mostly lower while European markets are currently lower across the board.  US Futures have been under some selling pressure all morning and currently suggest a lower open.  Stay focused on price action and don’t be surprised to see higher volatility and challenging price action ahead.

On the Calendar

calendar

On the Earnings Calendar, we have a very big week ahead with more notable earnings than I have the time to note here.  Make sure you’re checking earnings reports against all current holdings and new positions you’re considering.  Today we have 73 companies reporting.

Action Plan

The market has a lot to deal with over the next couple weeks, and I would suspect the price action could become more volatile and trading could become more challenging.    On the Economic Calendar this week we have the FOMC rate decision on Wednesday along with the GDP report and then the big Employment Situation number on Friday to name some of the heavyweights.  We also have a big week of earnings with many of most market influential companies reporting which could easily make for some wild price swings.

Price action wise we are simultaneously in the perfect price pattern for the market to rise or fall and I believe it will all be up to the FOMC and how the earnings come out that will decide the direction.  Believe me, I don’t want to see the market pullback, but I think we should prepare for that possibility.  Unfortunately, if it does happen there is a high probability will begin with an overnight gap.  Of course the same is true if the news supports higher prices because many of the big techs report after the bell.  Set your bias aside, remain flexible and focused on price as this week unfolds.  Remember sometimes less is more and we don’t have to trade every day to be successful traders.

Trade Wisely,

Doug

Compromise?

Compromise

Our government works in mysterious ways as two failed votes to reopen the government inspires confidence that a compromise may be forthcoming.  That hope is inspiring the bulls this morning with the US Futures suggesting a substantial gap up open.  Earnings, Durable Goods Orders, and New Hope Sales results may enhance the bullishness or temper that sentiment by the open but so far the bulls appear firmly in control.   

While the indexes were content to consolidate there was steady buying pressure showing up in a lot of stocks yesterday.  I personally found it very difficult not to overextend myself with so many great looking chart patterns and setups appearing.  As for now, this is a stock pickers market with a lot of good price action signals.  Unfortunately, we still have to hold our breath as we enter positions because all the government uncertainty could easily reverse the current sentiment in about half a heartbeat.  Keep that in mind as you consider the weekend ahead and the risk that can bring to your portfolio.

On the Calendar

Durable Goods Orders – Consensus – 8:30 AM Eastern

New Home Sales – Consensus – 10: AM Eastern

Baker-Hughes Rig Count – 1:00 PM ET

On the Earnings Calendar, we have 38 companies reporting.  Notable today: ABBV, APD, CL, DHI, LEA, NEE, SYF, & VOD.

Action Plan

While the indexes continued to consolidate yesterday, there was consistent buying pressure showing up in a significant number of stocks.  So many in fact it was difficult to stick to my plan and avoid becoming over-committed while still testing resistance in the indexes.  Both bills voted on yesterday to reopen the government failed, but that is now being viewed as a good thing because Senate leadership is finally trying to work out a compromise. 

Overnight Asian markets rallied despite the trade war jitters that continue to crop up every few days.  European markets are also bullish this morning helping the US Futures point a substantial gap up open of more than 150 points as a write this.  Of course Earnings and the two big economic reports could certainly change that before the open.  With the renewed hope that the government shutdown may soon consider your holdings carefully as we move into the weekend.  If the market does open with a nice gap up, I will likely bank some profits to reduce my weekend risk.  I wish you all a great day and a fantastic weekend!

Trade Wisely,

Doug

Between a Rock and a Hard Place

Between a Rock and a Hard Place

The market appears stuck between a rock and a hard place as talk of an economic slowdown, political uncertainty both domestic and abroad, and earnings season unfolds.  Indexes dance between significant levels of price resistance and current short-term trend supports waiting for the event that will determine direction.  While I believe it’s very healthy that the markets are consolidating all the outside influences means traders will have stay on their toes and prepared for just about anything.

Be cautious about over-committing to a directional bias as we chop around in this tight price action range.  Just one event could change direction, and unfortunately, that could easily happen overnight.  Yesterday’s whipsaw price action should serve as a reminder of a nervous market and how quickly sentiment can shift.

On the Calendar

calendar

On the Earnings Calendar, we have the biggest day this week with 125 companies reporting results.  Notable earnings: ISRG, ALK, BMY, DFS, ETFC, FCX, HBAN, INTC, JBLU, MKC, NSC, RCI, LUV, SBUX, UNP, GWW, WDC.

Action Plan

There was more conversation from IMF’s Lagarde about an economic slowdown overnight with China as the point of concern.  As a result, we see muted and mixed markets around the world.  As I write this US Futures, suggest a flat open, but I suspect that could change dramatically as the morning earnings results roll out.  Two bills to end the government shutdown mover forward to a today but both are currently expected to fail.  That’s really not important, but the heightened political spin leading up to the vote and the aftermath could certainly affect the market attitude.

As of now the Bulls and Bears appear deadlock with the indexes slipping into a consolidation range.  Personally, I think this rest is healthy for the market as we build a level of price action support just above the 50-day moving averages.  Unfortunately, with all the political uncertainty, economic slowdown talk and earnings results just one event could substantially change market sentiment.  That could mean a fast move up or a fast move down, and traders should prepare for the possibility of either.  A directional over-commitment could be a mistake as we continue to dance between support and resistance levels.

Trade Wisely,

Doug

Silver Lining?

Silver Lining

Although the selloff yesterday may have been painful for may long traders there was a silver lining showing at the close.  After a hard test of their daily 50-averages, all four of the major indexes bounced and closed at or just above this key psychological support.  This morning US Futures are currently suggesting a bullish open, but a lot will depend on the morning earnings reports if that holds.

With little on the Economic Calendar today, political uncertainty and global growth concerns, there is significant pressure for companies to perform and prove they can support current price levels.  Yesterday the VIX indicated a little fear is coming back into the market.  Couple that with earnings and we have a recipe for increased volatility hinged directly upon earnings results.   

On the Calendar

calendar

On the Earnings Calendar, we have 93 companies reporting today.  Notable reports, F, ABT, CP, CTXS, CCI, FFIV, KMB, LRCX, LVS, NG, PG, TXN, UTX, & XLNX.

Action Plan

A decline of 3% in Existing Home Sales yesterday enhanced the premarket fears of an economic slowdown pushing the Dow down 300 points.  However, after a hard test of the daily 50-averages, the bulls responded showing at least an initial willingness to defend it as support.  As tenuous as it may seem, the uptrend is still valid thus far and perhaps we a consolidation will develop.  Earnings Reports will be a key element over the next few weeks that determine market direction. 

According to new reports, the Presidents proposal to reopen the government will come to a vote later this week, but the opposition vows it will not pass.  Pressure from employee groups continues to increase as some 800,000 continue to work without pay.  Futures this morning are pointing to a bullish open currently suggesting a gap up of more than 100 points providing some relief to yesterday selloff.  Unfortunately, the bullishness has little to no tailwinds with Asian market having closed nearly flat on the day and European markets mixed but currently mostly lower.  With little on Economic Calendar, today Earnings Reports will be in high focus.

Trade Wisely,

Doug

Three Day Weekend Volatility

Three Day Weekend

Three day weekends are a nice break for traders, but they tend to create volatile price action and market reversals upon the reopening.  On Friday I mentioned my intention of taking profits and reducing risk ahead of the long weekend.  With the futures currently suggesting a Dow gap down between 150 and 200 points at the open, I’m that my profits safely tucked away before the close on Friday.

Should we not panic as if the sky is falling?  No, after such a huge market runs a pullback or consolidation is normal and healthy as long as price support hold and the bulls show a willingness to defend them.  The IMF report citing global growth concerns have markets around the world reacting negatively to the possibility of an economic slowdown.  However, the real test for our market will be company earnings reports.  So stay focused on price action, support, resistance, and trend for clues to market direction.

On the Calendar

Calendar

We have 81 companies reporting earnings today with notable earnings COF, FITB, HAL, JNJ, PETS, PLD, STLD, AMTD, TRV, UBS & ZION.

Action Plan

Concerns on of global growth concerns after an IMF report, the Government Shutdown in entering day 32 and new concerns about US/Trade negotiation progress have the bears pushing a bearish open today.  Asian markets all closed in the red overnight, and European markets are also lower across the board.  As a result, Futures are currently pointing to gap down open between 150 to 200 points lower at the open. 

The economic report of Existing Home Sales and a significant number of Earnings Reports this morning could easily improve or worsen the situation depending upon the results.  As nasty as this gap down may seem at the moment, keep in mind the indexes are currently holding above price support levels and their respective 50-day moving averages.  The expected pullback or consolidation is a healthy thing as long as the bulls defend support levels.  Keep in mind earnings season tends to increase market volatility and big morning reactions are typical.  Which means bearish markets can reverse bullish and vice-versa so remain flexible and focused on the price action and the patterns within the charts.

Trade Wisely,

Doug

Tariff reductions?

Tariff reductions

Yesterday’s news that the US was considering tariff reductions with China sent the index sharply higher.  Although there are still no specific details markets around the world reacted positively on the hope progress is being made.  Asian markets closed higher across the board, and European indexes are currently sharply higher this morning in reaction.

US Futures are pointing to a substantial gap up open that push US indexes above there respective 50-day averages just ahead of a 3-day weekend.  After such a strong bullish run and gaping higher this morning I will likely take-profits on several positions to reduce the risk of the long weekend.  Gaps are gifts, and I would rather make a bank deposit today than worry about the possibility of events that could change sentiment over the weekend and holiday.  If the market continues higher, I can always reenter but if the market reverses I won’t get a do-over to capture gains.

On the Calendar

calendar

On the Earnings Calendar, we have 15 companies reporting with the most notable being CFG, KSU, RF, SLB, STT, STI, VFC, and WIT.

Action Plan

After the bell, yesterday we NFLX reported a beat on the top line but a slight miss on revenue to kick off our the tech earnings season reports.  Next week the number of earnings reports begin to ramp, up and that will often increase market volatility.  First quarter earnings session drags out much longer, so it’s very important to make it a habit of check reporting dates as part of your daily preparation.  Skipping this step can make for very painful lessons.  Thus far we’ve had a mix of earnings results lets hope that begins to improve over the next couple weeks.

Next Monday the markets will be closed for Martin Luther King so think about your risk as we head into the 3-day weekend.  Today marks the 28th day of the government shutdown, and both sides appear unwilling to budge.  The market has largely ignored the shutdown but as it continues to drag out the unintended economic consequences are starting to appear and could begin to cause some market stress. Futures are pointing to a gap up open of more than 100 points on US/China trade progress.  A gap up ahead of a long weekend may be a good time to ring the register and bank some profits to reduce the risk of uncertainty.  Have a great weekend everyone!

Trade Wisely,

Doug

50-Day Resistance

Resistance

With indexes at or near significant price resistance levels and their respective 50-day moving averages, traders should be careful about adding new long positions and thinking about banking some profits.  Please understand that I am in no way suggesting bearishness.  In fact, with the DIA and the SPY so close to testing their 50- day averages I would not want to rule a bullish effort to do just that.  However, we can also not rule out the possibility of a pullback at resistance and some profit-taking to begin.

We have a lot of economic and earnings data coming out before the bell today, so anything is possible, but futures are currently pointing to gap down open.  Asian market closed lower across the board, and European markets are also all in the red this morning.  MS, has already reported an earnings miss this morning so we will need some good data to inspire the bulls.  The price support built over the last week with the tight range consolidation may now provide some selloff protection if the bears decide to come to work today.  As always, price is king so stay focused on price action for clues.

On the Calendar

calendar

We have 43 companies reporting earnings today with NFLX kicking off tech reports this afternoon.  Notable reports today AXP, BBT, FAST, JBHT, KEY, MTB, MS, PPG & TSM.

Action Plan

Earnings and Economic reports will likely be the key driving force for the market this morning.  On the Economic Calendar, we have Housing Starts, Jobless Claims, and the Philly Fed all coming out an hour before the market open.  On the Earnings Calendar, we will hear from BBT, KEY, MS, MTB, and PPG before the bell which could obviously move the market.  T2122 continues to suggest a pullback, or at a minimum, a consolidation could begin at any time, but so far, the bulls have had the energy and momentum to keep moving higher.

Currently, the Futures are suggesting a lower open, but with so much pending news anything is possible by the time we hear the bell ring.  With the DIA and the SPY so close to testing their 50-day averages I would not rule out the possibility of a bullish effort to accomplish that task.  If we do see some selling, the tight consolidation just below could easily serve to support prices keeping the bears in check.  Remember the rule: we want to buy stocks at or near price support.  With the indexes at or near price, resistance be very careful not to over-commit to long positions.

Trade Wisely,

Doug