Extreme price volatility displayed emotions from gloom and doom to bullish euphoria which produced a whipsaw on steroids. The good news is with the futures pointing to a possible follow-through this morning a nice bottoming chart pattern is possible. The bad news is that very little has changed and the political uncertainty is likely to keep volatility high with challenging price action.
This morning’s open will be about 800 Dow points off of yesterday slow. If that, not the very definition of extreme volatility I don’t know what is! Don’t chase the morning with the fear of missing out. Wait to see if buyers step in to support the gap and remember a pop and drop is now out of the question. Plan your trades carefully and realize this wild price action will require a higher tolerance to risk.
On the Calendar
On the Earnings Calendar,we have 34 companies on reporting, but we drop off into the lower twenty ’s and teens as the 4th quarter winds down.
Action Plan
No doubt about it the wild ride continues with a massive whipsaw covering about 1000 Dow points from top to bottom and then bottom to top. Asian markets also had a very volatile night but closing mixed but mostly higher. In Europe, the Sterling continues to fall after delaying the Brexit vote, but currently, their markets are shaking that off and are bullish across the board this morning. US Futures went into the evening down also made a nice recovery overnight and are currently pointing to a gap up around 200 points.
That’s around 800 Dow points off of yesterday’s low so be care not to chase fearing you will miss out. Remember we want to make sure buyers will actually step in to support the gap after the open rather than profit-takers selling into strength an producing a pop and drop pattern. With the wild volatility it will be very difficult to find low risk entry positions so if you do trade keep in mind your tolerance to risk should must be carefully considered.
The futures pointing to another gap down open the big question is will the bulls defend October/November price supports or will the bear’s seek a lower level. Asian and European markets fell overnight on disappointing trade data and global growth concerns. With so much political uncertainty weighing on the mind of the market we should expect volatility and challenging price action to continue for the near future.
As much as I would love to see the Bulls defend current supports, there is nothing in the current price action as of now suggesting that is the case. In fact, an unbiased look at the index charts shows us the possibility of more downside if the current support fails. If the Bulls do defend support, remember there is a lot of price resistance and technical damage above. With volatility so high anything is possible so if you do decide to trade be willing to take profits and cut losses quickly. Always remember that cash is a position and you do not have to trade every day to be a successful trader.
On the Calendar
On the Earnings Calendar,we have 36 companies reporting earnings today to keep traders on their toes. Continue the good practice of bouncing the earnings calendar against current holdings.
Action Plan
Futures opened yesterday afternoon and quickly fell 200 points but have slowly improved overnight. Asian markets closed sharply lower overnight on worse than expected trade data and European markets are lower this morning due to global growth worries. Consequently, the current US Futures markets are currently pointing to a modest gap down testing the strength of the November price supports but that could easily change as we near the open. If the November supports do fail then watch for DIA 240, SPY 260, QQQ 157, support levels to be tested.
With the VIX closing on Friday above a 25 handle fear could easily transition into to panic if sellers remain in control and November supports fail. As a result, we should expect volatile price action and higher option prices for the near future as political uncertainty continues to weigh on the market. If you’re currently short, watch price action carefully for potential bounces off of support as reasons to take profits. Also be careful not to chase short positions at or near price support levels. If you want to be a buyer, don’t try to predict or anticipate the bottom. That’s the job of the big institutions and keep in mind the bottom may still be lower. Wait for good price action signals before entering and prepare for volatility.
After hearing the FOMC would take more of a wait and see approach to interest rate increases the indexes found support and producing a massive whipsaw rally. The QQQ managed to fill the gap while the DIA, SPY, and IWM fell just short of accomplishing that task. Unfortunately, the current Dow futures are pointing to another triple point gap down at the open as program trading continues to wreak havoc with massive volatility.
Congress did manage to avoid a government shutdown tonight but only kicked the can down the road for couple weeks leaving a big cloud of uncertainty as to what happens next. Additionally, trade negotiations between the US and Canada and the threat of a yield curve inversion add density to the uncertain clouds as we head into the weekend. Consider the massive volatility and the daily gaps as you plan your risk into the weekend.
On the Calendar
For the last trading day of the week, we have just 17 companies reporting earnings. Although the 4th quarter earnings events continue to wind down, we must remain vigilant checking report against current holdings.
Action Plan
After an ugly gap down yesterday markets managed to hold at key support levels after hearing that the FOMC will adopt a wait and see approach in regards to new rate increases. Yesterday’s slow grinding rally came close to filling the gap in the DIA, SPY, and IWM while the QQQ filled the gap and demonstrating the volatility remains very high. Unfortunately,the current futures market is pointing to another gap down around 100 points.
With so much wild volatility retail traders have much take a moment to think about the risk they carry into the weekend. Clearly, anything is possible as index and quant fund automatic trading algorithms continue to thrash market confidence. As for me except for the possible quick intraday trade I’m content to wait for the market to gain some stability. Weigh your risk carefully as the weekend nears and remember cash is a position often underutilized in times of such market turmoil. Have a great weekend everyone!
US/China trade war concerns, sharply falling oil prices and the arrest of a Chinese tech CEO may have combined as the Grinch Who Stole Christmas. Asian stocks declined sharply overnight, and European markets are currently sharply lower across the board this morning. As a result, the Dow Futures are pointing to 400 point gap down at the open. The market hates uncertainty, and until we get some resolution on some of this politically generated uncertainty, this roller-coaster ride of market volatility is likely to continue. It seems hard to believe that it was just Monday we were looking futures gaping up 450 points.
Remember when the market is thrashing around like this you are not required to trade! As a trading coach, I’ve talked with a lot of traders that wish they would have taken the month of November off because it would have saved them a bucket load of capital. Only trade when you have an edge. If you are consistently losing money stop trading! The market will eventually calm down, and your edge will return, but if you lose your capital to this very emotional market, you could be out of business before that happens. It’s not personal its business and you have to know when the risks are just too high. Stay calm, disciplined and focused on price action.
On the Calendar
On the Earnings Calendar, we have 57 companies reporting results today. Make sure to do your due diligence.
Action Plan
This morning we face a very ugly market open, and it looks as if the Grinch really has stolen Christmas this year. On Tuesday the 3-year bond yields rose the 5-year yield which is known as a yield curve inversion. Although the market reacted in a very negative way, typically a true yield curve inversion requires the 2-year bond yields to rise above 10-year which of course has not happened as of now. The US/China trade deal may have just become much more complicated as the CEO of a China tech company was arrested in Canada at the request of US. Also, this morning oil prices are sharply lower as OPEC production cutbacks were less than expected.
While it may seem like the sky is falling this morning, we must say calm, disciplined and focused on price action. We have a huge economic calendar today that could easily improve the or worsen the situation throughout the day. However, if we become compromised emotionally, then we risk missing out on the potential opportunities that could occur. Remember the high gap up on Monday found no buyers after the open. We must stay focused on price action waiting to see if the bears pile on after the open supporting the gap down or if the bulls step to defend price support and gobble up the bargain prices.
Sadly yesterday’s hyped up big gap unfortunately and not that unsurprisingly found profit takers and raising the concern of an immediate gap fill. In Monday’s morning note and market prep video, I cautioned about the possibility of a pop and drop pattern. I received a lot of comments and emailed about making a great call, but please understand that was not a prediction. It was merely an observation after an unbiased study of the index charts.
Believe me; anyone can do what I do if you study the chart for what it is rather than what you want it to be. All you have to do is remove your bias, set aside your emotion and focus on the clues left in the price action of the chart. Today, with the market pointing a triple-digit gap we once again must be careful not to chase. Watch the price action a see if the bears pile on after the open supporting the bearish gap or if the bull set up to defend price support. Keep in mind; the market closes Wednesday for the national day of mourning and Friday night the government faces a shutdown. Plan your risk carefully as anything is possible with the market re-opens Thursday morning.
On the Calendar
On the Earnings Calendar, we have just over 30 companies reporting this morning, and there are 25 on the calendar reporting even with the closed on Wednesday.
Action Plan
Despite all the morning hype surrounding the trade negotiations and resulting in huge morning gap, the market found mostly sellers after the open. They are following through with that sentiment this morning with the futures pointing to 100 point gap down and opening the door for a possible fill of yesterday’s gap. With the market closed on Wednesday for a national day of mourning the possible government closure on Friday night, the market is understandably pensive.
The market is also beginning to worry about the possibility of a recession as it watches for the possibility of a yield curve inversion. Although I’m expecting the market remain quite volatile, I would not be at all surprised to see the price action become light and choppy today as we head into the Wednesday closure. With yet another triple point gap we must be careful not to chase and wait to see if sellers pile on in support of the bearish gap or if the bulls set up to defend support levels after the morning rush. Remember anything is possible Thursday morning when the market reopens so plan your risk carefully.
This morning the bulls are celebrating as the G20 meeting produced an agreement to kick the 25% tariff increase 90 days down the road as the US and China try to work out a trade agreement. As a result of this extension Asian and European markets reacted with sharp gains and the US Futures are pointing to a 400 point gap up. It’s great to see such a big bullish reaction this morning, but let’s keep in mind that until we get a completed agreement, we can expect this wild market ride to continue!
As you plan your week keep in mind, the market will close on Wednesday to honor the life of George H. Bush. Also, keep in mind that, the Federal Government will shut down Friday night unless Congress reaches a budget agreement. If that not enough pressure the president is planning to end the NAFTA in an attempt to force the Congress to pass the new trade agreement. What could go wrong! I think it would be wise to prepare for very high volatility, big gaps, and possible overnight reversals in the days and week ahead.
On the Calendar
On the Earnings Calendar, we have 31 companies expected to report today. Make sure your checking against current holdings and before entering new positions as part of your daily preparation.
Action Plan
About all, we can do this morning is hang on tightly and prepare for volatility with the futures indicating a huge gap up the open. The US and China have agreed to hold the more than 200 billion in tariffs at 10% for another 90 days. If they are unable to complete the agreement within the additional 90 days, the tariffs will ratchet up to 25%. I guess the good news here is that the countries are talking, but I must admit I have trouble understanding how kicking the decision down the road for 90 days equates to 400 points Dow rally this morning.
What this means to me is that we should expect the wild market ride to continue as the battle over the details in the coming months. Also, take note that this Friday, the Federal government could shut down unless a budget deal can be agreed upon by Congress. The major sticking point is the border wall. If that’s not enough turmoil, the president plans to exit the NAFTA agreement in a force Congress to pass the newly negotiated agreement! The President declared Wednesday a national day of mourning with the passing of former president George H. Bush which will also close the stock market for the day. Plan your week accordingly and don’t be surprised to if we experience some hyper-volatility and big overnight swings in the days ahead.
Unable to follow through on Wednesday’s momentum traders face some difficult decisions as we head into the weekend and the outcome risk of the G20 meeting. Will the US and China kiss and makeup or will the tensions between the only increase when the tow very stubborn leaders meet? Unfortunately, the answer to that question will happen over the weekend. Will you accept the additional risk of holding into the weekend or will you choose close positions to avoid the unknown?
If you look at the index charts from a technical perspective, they are at a critical point of decision. Can they break through the downtrend resistance or will they fail, creating yet another higher low an increasing the technical damage. A tough call for sure and the fact that futures are pointing to a triple point gap down this morning does not make that decision any easier! No matter what you decide to go into the weekend with your eye’s wide open about the potential risks or rewards depending on the outcome of the G20 meeting.
On the Calendar
On the Earnings Calendar, we have only 17 companies reporting as we slide into the weekend.
Action Plan
For a brief time yesterday, it looked as if the momentum of Wednesday would win the day but sadly heading into the close indexes slipped back into the red. Now the will market look to the G20 meeting for inspiration, but unfortunately, the outcome of that meeting will occur of the weekend. This morning futures are suggesting a triple point gap down amid swirling speculation of the possible outcome. The question for today is will we see follow-through selling after the open with traders avoiding the weekend risk or will volume simply dry up as we wait?
Technically speaking even after the big Wednesday rally the indexes are still in a downtrend. A failure at or near the downtrend could create more technical damage and raise concerns of yet another test of the lows. Keep an on the VIX for clues of fear creeping back in the mind of the market. Honestly, I hope cooler heads prevail, and we simply slide quietly into the weekend as we wait. However, putting our head in the sand an not preparing for all possibilities is irresponsible. Stay focused on the price action after the morning rush for clues and consider the risk carefully as we head into the weekend.
Did anyone notice a sparkle in Jerome Powell’s eye and check for reindeer on the roof as he delivered the huge gift of a less aggressive FOMC? Moments, after he began to speak the gates opened and the bulls unleashed a huge wave of buying that quickly cut through pesky price resistance levels. Currently, the US Futures are pointing to a modest gap down open this morning, but a little profit-taking after such a huge one-day bull run should not be a big surprise.
Keep a close eye on the price action because the sheer momentum of yesterday’s move could inspire the bulls to continue pushing forward into the weekend. Now the market will focus it’s attention on the G20 meeting and hoping it will help deliver the bigger gift; progress on the US / China trade negotiations. With the harsh rhetoric and threats lobed back an forth between the two leaders that might be a big ask. Stay focused on price action the clues will be there.
On the Calendar
On the Earnings Calendar, we have our biggest day of the week with 54 companies expected the report to keep us on our toes.
Action Plan
The Fed Chairman Jerome Powell triggered a bullish stampede yesterday indicating a less aggressive
FOMC than the market had expected. The burst of buying cut through resistance levels in the indexes as if a pressure value suddenly opened. After such a huge move its not unreasonable to think there will be some profit taking and according to this morning’s futures we should see a modest gap down.
If we could now get a trade agreement between the US and China, Santa’s could come to town in a newly turbocharged sleigh! Unfortunately, it’s not all sunshine and roses this morning with the news of a police raid on Deutsche Bank with allegations of money laundering. After the morning pullback, keep a close eye on the price action, yesterday’s huge momentum could keep the Bulls pushing forward into the end of the week.
Although volume remained light a relief rally is still a welcome site! The bulls found the energy to not only defend the support of yesterdays gap down but also push the Dow into the November 20th gap. A good start but let’s keep in mind that with so much technical damage and the threat of increasing tariffs just around the corner the price action is likely to remain very challenging. The QQQ is only a couple days away from joining the IWM with a death cross, and the DIA still has the 200-day average as resistance.
Of course, a trade deal with China would be a game changer but now seem less and less likely as the rhetoric continues to fly between the two countries. Asian markets closed sharply higher overnight, and European markets are currently mostly higher as well. As a result, the US futures are pointing a gap up open of more than 100 points this morning. As nice as it is to see the bulls running, please remember to respect the overhead resistance. Chasing into the market on a gap up near price resistance levels is a dangerous business. It would be wise to wait and see if buyers step in to support the gap or if profit takers take the gift provided by the gap.
On the Calendar
On the Earnings Calendar, we have just under 40 companies expected report so please continue to check new and existing positions as part of your daily preparation.
Action Plan
After a concerning gap down yesterday the bulls hung in there defending support moving the indexes higher even though volume remained quite low. The big gap down created on 11/20/18 now has a good chance of being filled and challenging the nest level of resistance. Unfortunately, the QQQ is only a couple days away from joining the IWM with a death cross. We should expect challenging price action and volatility to continue.
Even with the current relief rally, we must keep in mind that the overall markets are still in a downtrend. That means we have to be on the lookout for possible failures as we approach resistance levels. This morning the futures are pointing to a gap up open, and we all know that brings with it the possibility of the dreaded pop and drop pattern. If you’re already long, remember that gaps are gifts and consider taking some profits. However, if you’re looking to enter a new position, make sure there is follow-through buying supporting the gap.
After the big gap and rally yesterday I was hoping for a little follow-through today, but a little profit taking would not be that unusual. So far this morning presidential trade war threats have trumped the record-breaking Cyber Monday sales event. (pun intended) As a result, AAPL is under a little pressure this morning as the hits keep on coming for the battered tech sector.
If the Bulls can defend yesterday’s low in the QQQ’s, then the strong holiday sales should extend the relief rally. However, if the Bears are allowed to breach yesterday’s index lows fear could easily win the day, and a retest of last Tuesdays low would not be out of the question. Volume should return of the next few days so be patient, disciplined and focused on price action. We all want to see the market recover but what we want is not important. See the chart for what it is not as we want it to be!
On the Calendar
On the Earnings Calendar, we have 33 companies reporting result today.
Action Plan
The online shoppers worked hard all day yesterday increasing yesterdays Cyber Monday sales by nearly 20% over last year and setting new records. Now that the Thanksgiving shopping events are over and vacations ending volume should begin to return over the next couple of days. Unfortunately, futures are pointing to modest gap down this morning with the president threatening tariffs on all imported iPhone’s from China. Consequently, AAPL is under a little pressure this morning putting even more pressure on the already vulnerable tech sector.
After such a big rally yesterday some profit taking would be normal but if the sellers breach yesterday’s low a retest of last Tuesday’s could be possible. However, if the bulls can defend yesterday’s low’s then a move higher to test resistance seems likely assuming trade war rhetoric doesn’t get in the way. Be patient, flexible and focused on price action without bias, remembering there is no need to rush to a trade. The volume will return, but I would not be at all surprised if it does so slowly over the next few days.
US/China trade war concerns, sharply falling oil prices and the arrest of a Chinese tech CEO may have combined as the Grinch Who Stole Christmas. Asian stocks declined sharply overnight, and European markets are currently sharply lower across the board this morning. As a result, the Dow Futures are pointing to 400 point gap down at the open. The market hates uncertainty, and until we get some resolution on some of this politically generated uncertainty, this roller-coaster ride of market volatility is likely to continue. It seems hard to believe that it was just Monday we were looking futures gaping up 450 points.
Sadly yesterday’s hyped up big gap unfortunately and not that unsurprisingly found profit takers and raising the concern of an immediate gap fill. In Monday’s morning note and market prep video, I cautioned about the possibility of a pop and drop pattern. I received a lot of comments and emailed about making a great call, but please understand that was not a prediction. It was merely an observation after an unbiased study of the index charts.
Unable to follow through on Wednesday’s momentum traders face some difficult decisions as we head into the weekend and the outcome risk of the G20 meeting. Will the US and China kiss and makeup or will the tensions between the only increase when the tow very stubborn leaders meet? Unfortunately, the answer to that question will happen over the weekend. Will you accept the additional risk of holding into the weekend or will you choose close positions to avoid the unknown?
Did anyone notice a sparkle in Jerome Powell’s eye and check for reindeer on the roof as he delivered the huge gift of a less aggressive FOMC? Moments, after he began to speak the gates opened and the bulls unleashed a huge wave of buying that quickly cut through pesky price resistance levels. Currently, the US Futures are pointing to a modest gap down open this morning, but a little profit-taking after such a huge one-day bull run should not be a big surprise.
Although volume remained light a relief rally is still a welcome site! The bulls found the energy to not only defend the support of yesterdays gap down but also push the Dow into the November 20th gap. A good start but let’s keep in mind that with so much technical damage and the threat of increasing tariffs just around the corner the price action is likely to remain very challenging. The QQQ is only a couple days away from joining the IWM with a death cross, and the DIA still has the 200-day average as resistance.
After the big gap and rally yesterday I was hoping for a little follow-through today, but a little profit taking would not be that unusual. So far this morning presidential trade war threats have trumped the record-breaking Cyber Monday sales event. (pun intended) As a result, AAPL is under a little pressure this morning as the hits keep on coming for the battered tech sector.
