Another Victory for the Bulls
After closing at new records high in the QQQ’s and IWM yesterday futures currently suggest yet another bullish open this morning. Even though the DIA and SPY close the day flat, I consider that a victory for the Bulls as they held on to Monday’s strong performance. Although there are lots good charts, If your not already in this rally I would caution you not to chase.
The fear of missing out is a very strong emotion that every trader has to overcome. If you miss an entry, it’s usually better the just let it pass then to chase into the trade. I can tell from painful experience that chasing often has the trader entering at or near the point when the stock pulls back. Instead of chasing, mark up the chart put it in a watchlist and wait for the next entry signal. As long as a stock maintains, a trend there will be more opportunities to profit.
On the Calendar
There are three potential market-moving events on Wednesday’s Economic Calendar. At 8:30 AM Eastern we get readings on both International Trade & Productivity and Costs. Forecasters expect the international trade deficit for goods and services to hold steady in April at $49.0 Billion. Productivity is expected to grow 0.7 percent with unit labor costs up 2.8 percent vs. the 2.7 reading last month. At 10:30 AM we get the latest reading on Petroleum Supplies which have no forward forecast. Other than that we have a reading of Mortgage Applications at 7:00 AM and Treasury STRIPS at 3:00 PM but are unlikely to move the market.
On the Earnings Calendar, we have 46 companies reporting quarterly results. Among them are SIG which reports before the bell and FIVE reporting after the close.
Action Plan
Yesterday we saw both the DIA and SPY chop sideways ending the day about where they started. After such a big move on Monday, I view this a win for the Bulls. The QQQ’s closed the day at a new record high as did the IWM which is showing impressive strength and leading the overall market. During the evening Asian and European were both bullish giving the US Futures an overnight boost. As I write this Dow Futures are pointing to a gap open of nearly 100 points, but that could certainly change as earnings and economic data come out.
While I remain overall bullish, I’m watching price action closely for clues pullback or profit taking as this rally matures. If the QQQ’s open positively as the futures currently suggests, it’s the 7th straight day of gains a reason to watch for signs of profit taking. As the QQQ’s and IWM gap up to new record highs, be careful not to chase stocks late there run. Go Bulls!
Trade Wisely,
Doug
The economy is humming right along.
With last weeks numbers indicating the economy is humming right along with strong jobs growth and wage increase, the Bulls seem ready to mount attacks on resistance levels. The European concerns have passed at least for now, and the US and North Korea summit is back on the schedule. This weekend the President will travel to Canada for the G7 Summit where there could be some tensions after leveling new tariffs on steel and aluminum on them last week.
Trade negotiations on the North American Free Trade Agreement and with China will likely continue to send shock waves through the market over the next several weeks, but Bulls currently seem inspired to move higher with a substantial gap up open to begin the week.
On the Calendar
The Economic Calendar this week gets going at 10:00 AM Eastern with Factory Orders. According to consensus, the durable good report expects orders to slip 0.4 percent in April. After that, there is Bill Announcement, two Bill Auctions, and the TD Ameritrade IMX report to close the calendar day at 12.30 PM.
Earnings Calendar
The Earnings Calendar shows 32 companies will report today to keep traders on toes with the most notable PANW after the bell.
Action Plan
With the Jobs number coming in strong and real wages increasing the Bulls found the inspiration they needed to move higher on Friday. International concerns in Italy and Spain have subsided, and it appears the summit with North Korea is back on for June 6th. Trade negotiations will once again take center stage and continue to weigh heavily on the market particularly with the President traveling to Canada this week.
Currently, the Dow Futures are pointing to more than a 100 point gap up at the open. After breaking resistance on Friday, the QQQ looks ready to attempt a new record high in the near future. The SPY is set to gap above resistance at the open today with the IWM leaning the way looking to post a new record high at the open. As always be very careful not to chase gap up opens as they can often create nasty whipsaws. Having said that, the Bulls do seem set to gain some control as long as trader negotiation jitters remain in check. Go Bulls!
Trade Wisely,
Doug
Bulls stepped up.
With Euro jitters fading (at least for now) the bulls stepped up to the plate yesterday in a show of strength. Holding the DIA and SPY 50-day average is vital if we hope to see additional price improvements in the market. The IWM moved with great confidence yesterday once again posting record high as it reacted bullishly to support.
These bullish moves in price still face key resistance levels as political uncertainty continues to swirl. Today the White House is expected to decide on steel and aluminum tariffs affecting some important trading partners. Obviously, the market is sensitive to this issue and react swiftly to the decision so keep a close eye on price action and prepared to react.
On the Calendar
The Thursday Economic Calendar starts with the Weekly Jobless Claims and Personal income and Outlays at 8:30 AM Eastern. Consensus suggests the weekly claims will come in at 224,000 a full 10K decline from last week. Personal income expects a moderate 0.3 percent in April with consumer spending is expected to increase 0,4 percent. Exclude both food and energy, and the core index expects only a 0.1 percent increase to 1.8 percent annual reading. At 9:45 AM the Chicago PMI is expected to rise to 58.4. Then at 10:00 AM forecasters expect Pending Home Sales to increase 0.4 in April as more homes come to market helping to boost sales. The EIA Petroleum Status reports is the last of the market-moving reports this morning and in not forwardly forecast. We have two Fed Speakes today at 12:30 PM & 8:30 PM along with two bond events and several non-market-moving reports to close the day.
The Earnings Calendar shows 63 companies reporting today with AEO, DG, and DLTR before the open. After the bell, we will hear from COST, LULU, and GME.
Action Plan
After the sharp morning gap up the bulls found stored reserves of energy pushing the markets sharply higher as Euro Jitters dissipated for the time being. Trade will be on the mind of the market today as the White House may decide to move forward on steel and aluminum tariffs. Currently, Futures are pointing to a flat to slightly lower open but with a big day of economic reports and several earnings events that could quickly change.
As our current positions continue to extend gains, make sure you are adjusting stops to protect profits. Don’t let greed get in the way of taking profits as political uncertainty continues to swirl on trade negotiations, North Korea and the Euro. The DIA, SPY, and QQQ continue in consolidation between key support and resistance levels. Breakouts or failures of these key levels could create some fast price action so watch closely.
Trade Wisely,
Doug
Political Uncertainty
The summer market not only has to deal with the political uncertainty of US trade negotiations but now also has to worry about the future of the Euro as Italian uncertainty shakes the market. With the newly elected officials struggling to form a government Italy may face another election that threatens the stability of the Euro.
All this political uncertainty could make for a challenging summer with prices whipping around in a politically generated storm where the outcome has far-reaching market effects. Yesterday the faced a triple point gap down and selloff and this morning the futures suggest a triple point gap up at the open. Plan your risk carefully and prepare for the possibility of more turbulence in the weeks to come.
On the Calendar
The Wednesday Economic Calendar gets going at 8:15 AM with the ADP Employment Report consensus at 187,000 new jobs created in May. The ADP has been running stronger than actual payrolls. AT 8:30 AM we have tow potential market-moving reports, GDP & International Trade in Goods. Forecasters expect the GDP to come in at 2.2 percent with consumer spending up slightly and the GDP index unchanged at 2.0 percent. International Trade in Goods deficit is expected to widen to a consensus $71.0 billion in April vs. $68.3 in March reading. The Beige Book at 2:00 PM which comes out 2-week before the FOMC will wrap up the potential market-movers for today. Other reports today include Mortgage Applications, Corporate Profits, Retail inventories, Redbook, and Farm Prices. Keep in mind that the Fed will issue a proposal to modify the Volcker Rule which curtailed proprietary trading banks after the financial crisis.
We have 56 companies reporting earnings today to keep traders on their toes.
Action Plan
Political uncertainty in Italy shock the markets on Tuesday sending banking stocks sharply lower with the stability of the Euro in question. It would wise to expect further shock waves to the market similar to those we experienced just a couple years ago with Greece. Unless they sort this out quickly, we could face a turbulent summer.
This morning the Dow Futures are pointing to a gap up open of more than 120 points as the market whips around in political winds generated in the US and now across the pond. The VIX rose sharply yesterday facing uncertainty on multiple fronts. Plan your risk carefully!
Trade Wisely,
Doug
Bears say, Howdy.
With everyone was enjoying a long weekend it would appear this morning the bears want to say howdy and mount an offensive. The normal culprit, US political uncertainty, does not seem to be the cause of the bearish move it seems to stem this morning from our friends across the pond. European indexes are lower with another extension request on the Brexit as a possible culprit.
Nonetheless, the Futures are pointing to a substantial gap down of more than 150 Dow points breaking below the consolidations support and adding another possible resistance level. With the DIA and SPY now so close to their 50-day averages a test of this key level now appears more likely. There is no need to panic, but there is a reason to raise your caution level. As always stay focused on price action and remain disciplined to your rules rather than letting emotion dictate business decisions.
On the Calendar
Although it’s only a four day work week, the Economic Calendar will be a busy one with a bunch of potential market-moving reports. Today we get things kicked off at 9:00 AM CoreLogic Case-Shiller as forecasters expect a slight decline to 6.4% vs. the February reading of 6.8%. At 10:00 AM the Consumer Confidence will remain strong according to forecasters that expect May to come in at 128.1 holding on to this year’s gains. After that, we have State Street Investor Confidence at 10:00 AM, Dallas Fed Mfg Survey, and 3-bond auctions to round out the calendar day.
On the Earnings Calendar among the 51 companies, a room favorite of late MOMO will report before the bell today. After the market close, we will hear form HPQ & CRM.
Action Plan
It was not a surprise to see Friday’s price action so anemic and choppy. Unfortunately, it also gave us no clues the big gap down open we currently see this morning. Currently, the Dow Futures suggest a gap down of more than 150 points following declines in European markets during the night. If the bearishness holds through-out the morning the DIA, SPY will gap below last Thursdays low and the consolidations price support. The IWM is currently indicated to open below the support of the breakout to new highs created on the 16th.
If there is a silver lining this morning, it’s the fact that all the major indexes currently remain above their respective 50-day averages and are at this time still holding onto the up-trend. With such a violent move at the open, it’s easy to make poor emotionally based snap decisions. As always watch the price action closely and follow your trading plans. At this point, a test of the 50-day seems likely; the big question is will this key level hold?
Trade Wisely,
Doug
Choppy Consolidation
After a lot of moving around reacting to the consolation of the North Korean Summit the market ended the day about where it started and still in consolidation. With the long holiday weekend ahead expect very light volumes and choppy price action. Currently, the futures suggest a slightly bullish open, but I highly doubt it will find enough energy to attack overhead resistance or move lower to test support.
There are times to trade than there are times its more productive just to do other things. Today is likely going to be the latter. I wish you all a wonderful 3-day weekend.
On the Calendar
The Friday Economic Calendar kicks off at 8:30 AM Eastern with the Durable Good Report which according to consensus will remain strong even though they expect it declined 1.2 percent. Ex-transportation the number should see a small gain of 0.6 percent and core capital goods could be up 0.7 percent in April. The Consumer Sentiment number out at 10:00 will remain strong according to consensus with a print of 99.0. We have one Fed Speaker at 9:20 AM, and three speaking at 11:45 AM. To close the calendar week, the Baker-Hughes Rig Count is out at 1:00 PM.
A light day on the Earning Calendar with only 15 companies reporting with FL being one of the most notable.
Action Plan
Dipping sharply after the cancellation of the North Korean Summit indexes managed to recover ending the trading day about where it had begun. If today were a normal day, I would take that as a possible bullish signal but with a holiday weekend just around the corner, not so much. Futures suggest a slightly bullish open, but I think we can expect volume to drop like a rock after the morning rush as traders head out for the long weekend.
With so much political uncertainty brewing in the trade negotiations I plan to go into the weekend light in my account and avoiding the urge to add any new risk. The major indexes are in a consolidation range, and I think finding enough volume to change that today will be near to impossible. Maybe the best course of action is to fire up that grill and get the weekend started early.
Trade Wisely,
Doug
Whiplash
With a sharp morning gap down and quick afternoon rally fueled by and FOMC surprise you may have a mild case of whiplash this morning. At the end of the day, the major indexes managed to hold onto price supports but remain in a chop zone below resistance. In other words, a wide range of consolidation fueled by political uncertainty making it very challenging for short-term traders caught in the whipsaw.
With more trade negotiation tremors likely and a holiday weekend just ahead the challenging price could continue so plan your risk carefully. Also, keep in mind that we could soon experience lighter than normal volumes as traders take off early to extend their labor day weekend.
On the Calendar
We have a full Economic Calendar this Thursday, but there are only two reports with the potential of moving the market. Weekly Jobless claims at 8:30 AM according to consensus will decrease by 2,000 to 220K and continuing to show very strong labor demand. Then at 10:00 AM Existing Home Sales with a consensus annualized rate of 5.600 million will hold the strong gains of the last couple readings. Other than that Consumer Confort index @ 9:45, Nat. Gas @ 10:30, Kansas City Mfg Indes @ 11:00, Fed Balance Sheet & Money Supply @ 4:30. We also have Fed speakers at 10:45 AM and 2:00 PM along with 4-bond events today.
The Earnings Calendar shows 51 companies will report earnings today with BBY before the bell and GPS after the market close.
Action Plan
After a nasty opening gap down the bears seemed to have full control and continued to drive the market lower throughout the morning and early afternoon. Then at 2:00 PM Eastern the FOMC surprised the market suggesting they were willing to allow inflation to rise above 2% sparking a sharp rally to close all four of the major indexes positive on the day. If you feel your suffering from a little whiplash this morning, you’re not alone.
As I write this, the Futures are pointing to a flat open, but Economic new, and Earnings reports could quickly change that before the open. With so much political uncertainty as trade negotiations, new reports send tremors through the market and facing a 3-day weekend I would not be surprised to see choppy price action with declining volumes after the morning rush. Keep in mind that a lot of traders will likely extend their labor day with a few days of vacation. Keep that in mind as you plan your risk into a holiday weekend.
Trade Wisely,
Doug
Tweet-storms an uncertainty.
Sadly yesterdays bullish attempt to break through resistance was unsuccessful amid presidential trade comments and Tweet-storms that continue to ruffle feathers. The bad news is that the futures this morning are pointing to a gap down market open confirming the bearish engulfing patterns printed on all four major indexes. The good news is that the 50-day moving averages and the current trend still hold the possibility of supporting price.
Unfortunately, as the trade negotiations continue the market will have to tiptoe on eggshells as we wait for a resolution. Toss in the North Korean summit the North American trade negotiations and the FOMC minutes, and we have a pile of uncertainty likely to keep the market on edge.
On the Calendar
The hump day Economic Calendar has four potential market-moving reports. The first is the 9:45 AM PMI Composite Flash which consensus expects the composite at 54.8, manufacturing at 56.5 and services at 54.6. At 10:00 AM New Home Sales according to forecasters will slow slightly to a 677,000 annualized rate vs. the 694,00 April surge. The EIA Petroleum Status report at 10:30 AM has shown a slow, steady trend of declining supplies helping to support rising oil prices. Then at 2:00 PM is the FOMC minutes which may shed more light on the Fed’s thoughts regarding future interest rates. Other than that we have 2-bond auctions at 11:30 AM and 1:00 PM followed by a Fed Speaker at 2:15 PM to complete the calendar day.
On the Earnings Calendar, there are 33 companies reporting today. Among those before the bell is TGT and LOW with CPRT and NTAP fessing up after the bell. Stay on your toes.
Action Plan
A disappointing day in the market after the White House expressed disappointment about the progress of the China trade negotiations. Unfortunately, that left behind bearish engulfing candle patterns on all four major indexes. The bearish engulfing requires follow through with a lower low print today to be valid, and sadly the Futures are pointing to a substantial gap down this morning. Of course, the move lower and failure at resistance is a concern but if there is a silver lining, it would that indexes still have their 50-day averages and trend as support. Let’s hope the bulls are strong enough to defend and the Tweet-storms subside.
Trade Wisely,
Doug
Two-sided price action.
It was of course very nice to the Bulls so inspired in the early morning session yesterday producing some very nice profits for the beginning of the week. Unfortunately, after making a run at resistance levels, the price action became very two-sided and left behind candle patterns of concern rather than confidence.
Tucked up against resistance and printing possible topping candle patterns leaves a trader stuck in a bit of a quandary. Is the door open to a path of profits or is it a trap door with just enough rope to hang yourself if you dare to wager a prediction. I must admit I am holding on to hope that the bulls will find the energy to push through resistance but that hope will not prevent me from being ready if Bears ultimately wins the battle at resistance.
On the Calendar
An unusual second day in the row of no expected market-moving reports on today’s Economic Calendar. The Redbook comes out at 8:55 AM Eastern, followed by the Richmond Fed Mfg. Index at 10 AM. After that, two bond auctions are occurring at 11:30 AM and one at 1:00 PM.
On the Earnings Calendar, 50 companies are reporting their quarterly results. Before-the-bell AZO, TJX, KSS, AAP and TOL. After-the-bell, INTU, and URBN may be noteworthy.
Action Plan
With a little uncertainty in the price action at resistance, it will be important to watch closely and have a plan for both a bullish or bearish move. As this battle continues, it will be very important to remain flexible, unbiased and focused on price action clues. The good news is that the early Dow Futures are pointing to another bullish gap this morning and perhaps indicating the Bulls have enough energy to follow through.
With the IWM suggesting the 6th day up and another record high this morning I would watch this index closely for clues of a possible pullback at any time. It may well serve as an early warning system for the overall market if a pullback does begin.
Trade Wisely,
Doug
Playing nice with each other.
The Bulls appear ready to leap the fence this morning gaping the Dow sharply higher with the other indexes following suit. The media labeled, Trade War, was apparently called off as China and US officials playing nice with each other. Big surprise, mutually assured destruction of economies was never the goal!
Although the market looks to open higher across the board, they still have significant levels of resistance to deal with just above. The Bulls may have the inspiration to leap higher, but the question is do they have the energy to break through resistance. Keep that in mind as you plan your trading day and be careful not to chase entries into resistance.
On the Calendar
The Economic Calendar has a full day scheduled for the Monday, but none of the reports are likely to move the market. The Chicago Fed National Activity Index at 8:30 AM, 3-bond reports, and Fed Speakers at 11:30 Am, 2:15 PM, and 5:30 PM.
On the Earnings Calendar, we have 48 companies fessing up to their quarterly results. Although earnings season is winding down, traders must always be aware of the earnings reports on companies you hold or at thinking of buying. Failure to do so can lead to a very expensive lesson in planning and preparation.
Action Plan
News over the weekend that the US and China will play nice with each other and earnestly work to avoid a so-called Trade War has the bulls fired up this morning. After only four days of consolidation, the Dow looks as if its ready to trade another run at 25,000. Currently, the Dow Futures are indicating a gap up of more than 200 points with the other indexes leaping as well.
As exciting as it is to see the bulls inspired higher be careful not to chase and enter trades at price resistance. Make the market and the stock you are considering for purchase prove they can not only breach resistance but hold it as support. Years ago that was a major problem for me, and it cost me a lot of money and time. I would get caught up in the morning hype, leap in with both feet and later realize I had entered positions almost exactly at the point of a pullback. A pain lesion I hope you don’t have to learn the hard way as it did.
We should have some very nice profits this morning on our long positions. Our two short positions that are holding some very nice gains will likely give back some of the gains, but as of now, the trade patterns are still valid if you choose to hold.
Trade Wisely,
Doug
After closing at new records high in the QQQ’s and IWM yesterday futures currently suggest yet another bullish open this morning. Even though the DIA and SPY close the day flat, I consider that a victory for the Bulls as they held on to Monday’s strong performance. Although there are lots good charts, If your not already in this rally I would caution you not to chase.
