New all-time highs

Fortune favored the bold this week with the Dow surging over 575 in three days to set new all-time highs for the index.  Not wanting to be left behind the SP-500 joined in on the bull run also closing at a new record high.  Clearly, the bulls are in control, but I am just a little concerned that exuberance may have temporally over extended prices in the short-term, particularly in the Dow.  As a result, I was a net profit taker yesterday and will likely continue to do so today reducing my risk into the weekend.

Please don’t misunderstand I am not bearish, and currently, there are no signals in the market to suggest bearishness!  I am simply following my rules of taking-profits into strength and doing my job as a trader; making money!  Remember today is Quadruple Witching day which can result in increased volatility and very choppy price action.  Also as you plan your risk into next week keep in mind w have an upcoming FOMC meeting and a possible interest rate increase for the market to deal with.

On the Calendar

A very light day on the Friday Economic Calendar with only two reports neither expected to move the market.  The PMI Composite FLASH comes out at 9:45 AM Eastern followed by the Baker-Hughes Rig Count at 1:00 PM.

Only two Earnings Reports today, both happen after the close today.  They are ELLO and NTZ which are very insignificant reports.

Action Plan

The Bulls showed tremendous energy yesterday gaping up, holding the gap and then continuing higher the rest of the day in both the Dow and the SP-500.  The Dow closed up 251 points on the day and more than 577 points in just 3-days to set a new all-time high.  The SP-500 also closed at a new record high while the NASDAQ challenged the price resistance of last week.  Overnight Asian market all closed higher and European markets are currently very bullish across the board.

As I write this, the Futures are pointing to a flat to modestly bullish open, but you may notice that the SPY is indicated to open lower due to dividend payments.   Today is a Quadruple Witching day which means market index futures, index options, stock options, and stock futures all expire today which usually results in increased volatility.  With very little economic news and earnings reports to drive the market, we could see an exceptionally choppy day.  I used the rally yesterday to take several profits and will very likely do more profit-taking today to reduce my risk heading into the weekend.  As you plan ahead, remember that the FOMC begins next week and interest rates are likely to rise.  Have an awesome weekend everyone.

Trade Wisely,

Doug

Dow near record highs

Historically September is a down month according to the Traders Almanac, but it would appear the bulls didn’t receive that memo with the Dow near record highs.  In fact, the bulls only need to gain 1% to breakout to new highs in the Dow and with the futures suggesting a gap up open the SP-500 is poised to set a new record at the open today.  The QQQ and the IWM are lagging behind that’s not likely to deter the bulls from getting that bullish headline accomplished.

Keep in mind that the Dow has rallied just over 320 points in just 2-days.  Chasing this move now so close to highs would we unwise because profit-taking could begin at any time as we move toward the weekend.  Also, keep in mind that the FOMC meeting begins next week and the odds of an interest increase are very high so plan accordingly.  Fast price action, head fakes, whipsaws, and reversals tend to be prevalent at new market highs so stay on your toes and focused on price.

On the Calendar

A busy day on Thursday’s Economic Calendar begins with two market-moving at 8:30 AM Eastern.  First, the Weekly Jobless Claims expect the initial claims to come in at 210,000 bouncing 2K after 2-weeks at 50-year lows.  Second, the Philly Fed Business Outlook Survey has consensus looking for a  reading of 19.6 for September up sharply from 11.9 in August.   !0:00 AM brings the Existing Home Sales report which expects a modest increase to 5.360 million annualized vs. July’s 5.340 million.  Also at 10:00 AM we get the Leading Indicators report followed by the 10:30 EIA Natural Gas Report.  We have 7-Bond events between 11:00 AM and 1:00 PM today and wrap up the calendar day with Fed Balance Sheet and Money Supply at 4:30 PM.

On the Earnings Calendar, we have just 11 companies reporting today with DRI and THO among those reporting before the bell.  After the bell, MU and SCS are the most notable of the afternoon reports.

Action Plan

So far the market has certainly bucked the trend of weak September results with the Dow now just 1% away from new record highs and the SP-500 only 8.3 points away from all-time highs.  Although the number of stocks helping to lift the market has been in steady decline, it seems unlikely that the bulls will stop just short of a new Dow breakout.  Asian markets closed mixed but mostly modestly higher while European markets are currently decidedly bullish across the board.  Consequently, US Futures are pointing to a gap up open.

Remember to be careful chasing a gap especially at or near new record highs.  The Dow has rallied more than 320 points in just 2-days.  A push to new record highs seems very likely but keep in mind profit taking at the highs is also not out of the question.  As we head toward the weekend riding this big bullish wave make sure to take some profits along the way.

Trade Wisely,

Doug

Responsibility

Let’s talk a little about a traders responsibility.  The last few weeks has without question been challenging for swing traders with all choppy price action and intraday reversals.  I’ve been hearing from a lot of traders lately siting consistent losses and blaming all there woes on the news, market makers and White-house and various other villains.  At the risk of sounding harsh, if a trader is consistently losing money, the fault lies directly on the trader’s shoulders.  The responsibility for success or failure is ours and ours alone.

If your constantly losing money continuing to do the same things over and over and expecting a different result is insanity.  Stop trading and get some help immediately!  Your account is proving to you that there is a problem and its time to fess up and take responsibility.  If you don’t, plan to be one of those poor soles providing liquidity to the market until your money is gone!  Being responsible is never easy, but it’s also the only path to lasting success as a trader.

On the Calendar

An early start on the Wednesday Economic Calendar with the MBA Mortgage Applications report at 7:00 AM.  The potential market-moving Housing Starts report at 8:30 AM which expects an increase to a 1.240 million annualized rate for starts in August and permits rising to 1.3.15 million.  Also at 8:30 AM is the Current Account report.  Closing out the calendar day at 10:30 is the potential market-moving EIA Petroleum Status Report that is not forecast by consensus estimate.

On the Earnings Calendar, we have 12 companies reporting results today.  Most notable before the bell is CPRT and after the close RHT steps up to the plate.

Action Plan

Yesterday was a great day with the Bulls firmly in control and the Dow closing 184 points higher.  The QQQ had a very nice rally but by the end of the day failed to hold above a key resistance level so follow-through bullish price action is extremely important for the index.  The last thing we need is a failure resistance!

Asian markets closed higher overnight, and European markets are flat to modestly higher this morning.  As a result, US futures are currently pointing to a flat to slightly bullish market open.  After such a strong move yesterday a little rest or even some profit-taking is not out of the question.  The DIA and SPY are in a good position for a little rest or even a minor pullback, but keep a close eye on the QQQ and IWM because if they give up very much ground, the bears might sense weakness and attack.  So let’s go bulls!

Trade Wisely,

Doug

Markets hate Uncertainty

Markets hate uncertainty.  The swirling threat of tariffs has weighed heavily on the mind of the market for the last couple weeks.  Now that unknown is finally behind us the market can deal with the reality and get back to business.  Asian and European markets all responded higher, and the US Futures are pointing to bullish open as well recovering about half of yesterday’s losses in the SPY and the DIA.

Having lost a key level of support, the QQQ is showing a slight bounce back this morning, but it’s currently much more muted than that of the DIA and SPY.  We will have to watch it closely over the next few days to see if it can recover.  Even though futures are suggesting, bullishness be very careful not to get caught up and chase into the gap up open.  Give it time and wait for follow-through buyers to prove they support the opening prices.  Remember the lower risk entry occurs at or near price support.

On the Calendar

The Tuesday Economic begins at 8:55 AM Eastern with the Redbook.  At 10:00 AM Housing Market Index forecasters expect a 67 reading in September which is unchanged from August and the lowest reading in a year.  We have just one Bill Auction at 11:30 AM today.  Then the Treasury International Capital at 4:00 PM which is not forecast by consensus.

On the Earnings Calendar, we have 11 companies reporting with the most notable being AZO and GIS before the bell.

Action Plan

I must admit to being surprised to see the US futures pointing to a higher open this morning the 10% tariffs against 200 billion in Chinese products beginning next Monday.  Of course, China has already stated they will retaliate.  Putting on a brave face Asian markets closed higher across the board overnight, and European markets are also currently showing nothing but gains.

As of right now, the Dow is pointing to a gap up recovering more than half of yesterdays losses shrugging off tariff worries.   The SPY, QQQ, and IWM also indicate a higher open this morning, but the QQQ is in the most precarious position having closed sharply below a key price support.  Be careful not to rush into the gap waiting for follow-through buyers to prove their support of the gap.  Fast price action and quick reversals are certainly possible as the market reacts to the news.

Trade Wisley,

Doug

Challenging Market

Indexes holding above key support near all-time highs with indecisive daily candles that included daily price whipsaws has made for a very challenging market.  The Bulls continue to control the trend, so a move higher is certainly a possibility.  Indecisive candle patterns near all-time market highs suggests we must prepare for a possibility of the Bears gaining a foothold.  Toss in all the weekend conversation of China tariffs and the retail traders will have to be ready for just about anything.

US Futures are only suggesting a modest loss at the open currently but remember its how buyers and sellers react after the open that matters.  Stay focused on price action and remember all the intraday whipsaws we experienced last week could easily continue this week.  Be careful not to over-trade and stay focused on price action.

On the Calendar

We have 3-bond Settlements to begin the Monday Economic Calendar day.  At 8:30 AM Eastern we have the only potential market-moving report, with the Empire State Mfg. Survey.  Consensus for September is 23.0 with a continued strong build in orders and a rising backlog.  After that we one Bill Announcement @ 11:00 AM and 2-Bill Auctions @ 11:30 AM to close the calendar day.

On the Earnings Calendar, we show 15 companies reporting and by far the most notable of the day happen after the morning close with FDX, and ORCL confesses quarterly results.

Action Plan

Over the weekend there was sure a lot of conversation about China Tariffs form the Whitehouse to the financial talking heads.  Even a former Obama staff member chimed in surprisingly in support of the renegotiations of the China trade deal.  Asian markets closed mixed but mostly lower overnight while European markets are currently modestly lower across the board.  Consequently, US Futures are also currently suggesting a modestly lower open.  The stage appears set, and we should prepare for the possibility that the Whitehouse could lower the boom at any time.

At the close of Friday, the bulls were still in control, and the uptrends in the indexes continue to hold above key support levels.  Unfortunitually the candle patterns left behind on Friday were very indecisive.  Combine that with the threat of tariffs and a slightly lower open and indexes near all-time market highs; traders need to set aside their bias and prepare for anything.  Continue to watch for head fakes, fast reversals, and whipsaws.

Trade Wisley,

Doug

Bulls remain in control

With Asian markets mostly higher overnight and European markets currently bullish across the board the US Futures are pointing to a gap up open as the bulls remain in control for Friday’s open.  The NASDAQ regained a key support yesterday as the DIA and SPY pushed higher and the IWM decided to take a break.  If the Futures continue to maintain current prices, the SPY will open very near new record highs once again.

Once again I want to remind everyone to be careful chasing gaps into market highs.  Wait for proof that buyers will follow-through after the open.  Remember the pop and drops on the 10^th and 12^th of this week when you think about rushing into a gap open.  As always I plan to reduce my risk heading into the weekend and tucking in some of those tasty profits safely into the bank.

On the Calendar

A busy day this Friday on the Economic Calendar.  At 8:30 AM Eastern we get both Retail Sales and Import/Export Prices.  Consensus expects another solid month with a 4 % gain in August Retail Sales, remove autos, and the call is for a 0.5 percent gain.  August import prices expect a 0.1 percent decline while Export prices will increase 0.2 percent according to forecasters.  We have a Fed Speaker at 9:00 AM and then Industrial Production at 9:15 AM.

Capacity Utilization is expected to tighten to 78.3 percent with an increase of 0.4 percent in Industrial Production with the manufacturing component also up 0.3 percent in August.  At 10:00 AM we will get both Business Inventories and Consumer Sentiment reports.  Business inventories expect an increase of 0.5 percent as the underlying sales remain strong and the Consumer Sentiment Index also moves up to 97.0 according to consensus.  We wrap up the calendar day with the Baker-Hughes Rig Count at 1:00 PM.

On the Earnings Calendar, we only have five companies reporting with PLAY being the most notable before the bell.

Action Plan

Have you taken some profits this week?  If not, Friday is a great day to take some risk off the table before the weekend and tuck it safely away in your account.  Futures are pointing to a Bullish open following the lead of European markets that are currently higher across the board and Asian market closing the week mostly higher overnight.

If the market opens where the Futures currently suggests, the SPY will be very close to a new record high.  Remember to be careful not to chase the morning gap an continue to be watchful for clues of reversal and of course those nasty whipsaws that have plagued the market all week.  I wish you all a fantastic weekend.

Trade Wisely,

Doug

Whipsaws and head fakes

All bulls have remained in charge holding key support, but those pesky bears have certainly made this week challenging with all the whipsaws and head fakes they have used to muck up the works.  I would not expect the bears to give up easily, but the announcement that the US and China will come back to the trade negotiation table may finally inspire the bulls to break for higher ground.  Although still, a very dangerous storm with the east coast hurricane downgraded to a category-2 may also help to lift the mood of the market.

Leaving behind some questionable candle patterns in the indexes yesterday we are not out of the woods just yet and have to remain watchful of those nasty intraday whipsaws and head fakes.  However, the path higher seems to have fewer obstacles to overcome at the moment. Stay focused and price and always be prepared with a plan to deal with whatever the market tosses at us.

On the Calendar

The potential market-moving CPI report and the weekly Jobless Claims kick off the Economic Calendar at 8:30 AM Eastern.  Forecasters expect the CPI to rise 0.3% in August with the overall year-on-year core at 2.3 percent.  Consensus expects 210,000 in initial claims coming off a 50-year low as labor demand remains very high.  We have a Fed Speaker @ 10:00 AM, Natural Gas report at 10:30, three Bond Announcements @ 11:00 AM, another Fed Speaker at 12:30 PM, a 30-Yr. Bond Auction at 1:00 PM, the Treasury Budget at 2:00 PM, Fed Balance Sheet and Money Supply at 4:30 PM to wrap up the day.

On the Earnings Calendar, we have 33 companies fessing up to their quarterly results.  Before the bell, KR is among those reporting, and ADBE is the most notable after the market close today.

Action Plan

With all the gaps and whipsaws and choppy consolidations, this has been a rather challenging week.  On the positive side, the indexes have held on key supports but so far have not found the energy to follow-through to the upside.  Yesterday it was announced that the US and China could begin another round of trade negotiations.  As a result, Asian markets closed higher across the board with the European markets are mixed but mostly higher.  Consequently, US Futures are suggesting a bullish open as I write this.

The market continues to prone to intraday whipsaws but perhaps with China tariffs temporarily set aside and the east coast hurricane down to a category-2 storm the bulls can produce a more deliberate effort.  While the bears have not shown a lot of strength, they sure have been disruptive, and they will likely not give up easily.  We still need to be watchful of head fakes, and whipsaws so stay focused on price and prepared for anything.

Trade Wisely,

Doug

Bulls Stepped Up

After the nasty gap down open yesterday, the bulls stepped up to defend key support levels producing nice bullish engulfing signals on the DIA, SPY, and QQQ.  I honestly was hoping to see a very strong bullish follow-through this morning, but so far the Futures are pointing to muted open.  With a dangerous hurricane bearing down on the east coast and the continued threat of new tariffs a somewhat muted open is not all that surprising.

Bullish engulfing candles are great signals but remember they require a bullish follow-through to be valid.  If the bulls are unable to follow-through, the bears could see that as a sign of weakness and attack.  So come on bulls we need you to dig in and push hard!  It’s very easy to see great bullish signals and become overly biased and over committed to long positions before price confirms direction.  Stay focused on price action and be careful not to load up too heavily long until we see some follow-through.

On the Calendar

We kick off the Wednesday Economic Calendar at 7:00 AM Eastern with the MBA Mortage Applications.  At 8:30 the PPI according to consensus is looking for a 0.2 percent increase in August, and when excluding food, energy and trade services a 0.2 percent gains is also expected.  The Atlanta Fed Business Inflation Expectations is at 10:00 AM.  Then the EIA Petroleum Status Report comes out at 10:30 AM and although a market-moving report it’s not forecast forward with a consensus estimate.  We have a Fed Speaker at 12.45 PM and a Bond Auction at 1:00 PM.  Last but not least is the Beige Book release which is used by the FOMC to set monetary policy.  The next FOMC meeting announce is in 2-weeks on 9/26.

On the Earnings Calendar today we have just nine companies reporting.  There are no particularly notable reports before the bell, but after the close TLRD, PVTL & OXM are the most noteworthy.

Action Plan

Another day another nasty whipsaw but this one finished the day on a very positive note.  The DIA and SPY supports were not only defended, but Bulls rallied with enough energy to leave behind bullish engulfing candles.  The QQQ also produced a bullish engulfing candle rallying back to an important resistance level while the IWM held support but largely rested.  Asian market closed down across the board last night, and the current European markets are mixed but mostly positive.

Bullish engulfing candles are great but still require bullish follow-through price action to confirm the signal.  As I write this, the US Futures are suggesting only a modestly higher open this morning.  I must admit I was hoping for a bit more bullishness this morning following such a nice reaction to support levels yesterday.  However, with a powerful hurricane bearing down on the east coast and the lingering threats of new tariffs it’s not all that surprising to see a slightly muted response.  The good news, at least for now, is that it’s bullish but be careful not to chase and stay focused on price action.

Trade Wisely,

Doug

Pop and Drop

After gaping up nearly 90 points yesterday, the Dow found the only sellers and delivering the classic pop and drop whipsaw.  Leaving behind a bearish engulfing candle on the DIA suggest a lower print today but the fact the index continues to hold about a key support continues to give the Bulls a slight edge.  On the other hand, the NASDAQ appears to be the most vulnerable as it lingers below a key resistance level.

Yesterday I cautioned about chasing a gap caught up with the fear-of-missing-out.  The same caution holds true today.  It is just as wrong to chase a gap down as it is to chase a gap up.  Fool me once shame on you, fool me twice shame on me!  Emotional undisciplined trading is the pitfall for the majority of retail traders.  Don’t play that game and watch your account continue to be chopped up.  Today after the gap down wait and watch for follow-through because there is just as much chance of whipsaw up near support as there was for the pop and drop yesterday.

On the Calendar

Today’s Economic Calendar kicks off early today, but there is only one potential market-moving report.  We begin with the NFIB Small Business Optimism Index @ 6:00 AM then the Redbook at 8:55 AM.  The JOLTS report at 10:00 AM expects job openings to increase slightly to 6.670 million in July vs. 6.662 million in June continuing the trend of strong demand for labor.  Wholesale Trade is also @ 10:00 AM and we have three Bond Auctions between 11:30 AM and 1:00 PM to finish the Calendar day.

On the Earnings Calendar today we have just ten companies reporting results, and none of them are particularly noteworthy.  Make sure to keep checking because being surprised by an earnings report can prove to be a costly mistake!

Action Plan

Yesterday I cautioned about chase the morning gap and getting caught up with the fear of missing out.  The DIA found only sellers after gapping up nearly 90 points with the classic pop and drop whipsaw leaving behind a bearish engulfing candle.  The SPY and IWM faired better closing down on the day but continued to hold above Friday’s low prints while the QQQ stalled below resistance.  Currently, the Dow Futures are suggesting a gap down of equal magnitude of yesterdays gap up.

The good news is that the DIA, SPY, and IWM remain above key supports that could be defended by the bulls.  The QQQ’s appear to be the most vulnerable to a bear attack currently under price resistance.  If selling pressure continues after the market, open clues to future selling might manifest in the QQQ’s first.  Remember the Bulls will not likely give up easily so watch for a potential whipsaw back up at or near support levels.  It is just as wrong to get caught up, chasing a gap down as it is to chase a gap up.

Trade Wisley,

Doug

No Fear

Even in the face of 276 billion in possible China tariffs, the Bulls are showing no fear this morning with the Futures suggesting a substantial gap up at the open.  The DIA, SPY, and IWM having held key levels of price support last week look ready to for another leg higher.  The QQQ’s still has some work to do to reclaim a key support but the current bullish would suggest that is certainly possible.

Although the market is putting on a brave face this morning, keep in mind that the bullish sentiment could quickly shift if the tariffs become a reality.  If the market doesn’t care then why wouldn’t the president move forward with them?  Plan your risk accordingly.  Keep in mind whipsaw price action is possible near market highs so be careful not to chase with the fear of missing out.  Remember low-risk entries occur at or near price support not at or near price resistance.

On the Calendar

We begin this week with an Economic Calendar without an expected market-moving report the entire day.  We have a Bond Announcement @ 11:00 AM, a Fed Speaker @ 11:30 AM, 2-Bond Auctions @ 11:30 AM, TD Ameritrade IMX @ 12:30 and Consumer Credit @ 3:00 PM to close the day.

Of the 24 companies reporting on the Earnings Calendar this Monday, I don’t see anything particularly notable or market-moving.  However, it’s still extremely important that you are checking reporting dates against your current holdings.  Doing so is a simple practice that is important for all traders.

Action Plan

It would appear that the threat of new tariffs is not enough to deter the Bulls from pushing the market higher.  Asian markets were mixed but mostly lower overnight however European markets are currently showing modest gains across the board this morning.  There is still a significant amount of time before the open, but currently, the Dow Futures are suggesting a gap up of nearly 100 points.

Friday’s sudden attack lower was defended by Bulls holding key support levels in the DIA, SPY, and IWM.  The QQQ remained below an important resistance level but this mornings bullishness looks as if regaining this level as support is possible.  All-in-all the bullishness this morning looks good for a new leg higher in the market.  Remember too we watchful of whipsaws at or near market highs.  Also, remember the Fear-Of-Missing-Out is a powerful emotion so be careful not to over-trade or chase gapping stocks near resistance.  Ignoring the possible tariff now could still create a quick change in market sentiment if levied, so plan according.

Trade Wisely,

Doug