Focused and Flexible

As we head into the weekend with a strong Employment Situation report expected and the looming threat of 200 billion in tariffs, traders will need to stay very focused and flexible.  The DIA, SPY, and IWM are all holding just above key support levels.  Unfortunately, the QQQ’s failed its key support yesterday, but that can recover quickly if the bulls find something to inspire them.  However, if the bears happen to find inspiration to attack we could see some nasty price action should support fail in the other indexes.

Stay focused on price action watching for head fakes and whipsaws.  I also think it’s important to set aside your bias and remain flexible and prepared.  The market is at a critical decision point, and though I’m cheering for the bulls, it’s unwise to underestimate the bears.  Carefully plan the risk you carry into the weekend.

On the Calendar

The Friday Economic Calendar has only one market-moving report today, but they don’t get much more important than the 8:30 AM Eastern Employment Situation report.  The consensus is expecting a strong August with job creation rising to 195,000 and the unemployment rate falling to 3.8 percent.  Monthly hourly earnings are also expected to increase by 0.3 percent with the year-on-year rate rising to 2.8 percent.  Manufacturing is expected to show a very solid increase of 21,000 and private payrolls rising 190,000.  We have Fed speakers at 8:30, 9:00 & 10:45 AM with the Quarterly Services Survey @ 10:00 AM, the Baker-Hughes Rig Count @ 1:00 PM and Treasury STRIPS closing out the week at 3:00 PM.

On the Earnings Calendar, we have a light day with only 13 companies reporting.  Before the bell, HURC & GCO are among those reporting with MSB and UBA among those reporting after the close.

Action Plan

Yesterday was an interesting day with 3 of the indexes turning lower while the bulls focused their attention on the Dow.  While there were several bear attacks in the Dow creating interday whipsaws, the Bulls found a way to push right back.  Overnight Asian markets were mixed but mostly lower and European markets are currently lower across the board.  Consequently, current US Futures are pointing to a lower open but with a strong Employment Situation report expected an hour before the open that could quickly change the open expectation.

The QQQ’s failed at support yesterday, but the DIA, SPY, and IWM managed to hold just above key levels.  With the Employment Situation report and the threat of 200 billion in new tariffs leveled against China, we will have to flexible and focused.  As normal I will be looking to take some profits and reduce risk heading into the weekend.

Trade Wisely,

Doug

Bulls Held Tough

The Bulls held tough at trend and support yesterday even in the face of some nasty tech selling.  Now we need to see the Bulls muster the energy to follow-through and rally off of support.  With a very busy Economic Calendar today and several big earnings reports perhaps they can find the catalyst necessary to do so.  If the Bulls are unable to push higher, then keep a close eye on selling pressure in the tech sector.  We don’t want to see that pressure boil over in more selling that breaks support.

Be careful on the over-trade keeping in mind the possible 200 billion in tariffs threat that could happen this week and the big Employment Situation report on Friday which has in the past created light and choppy price action as the market waits.

On the Calendar

A busy day on the Thursday Economic Calendar begins at 8:15 AM with the ADP Employment Report.  ADP’s estimate in August is 182,000 but, this number has been quite inaccurate month over month.  The weekly Jobless Claims at 8:30 AM expect 213,000 up just slightly from last week when claims hit a 50-year low.   Also at 8:30 AM is Productivity and Cost which estimates nonfarm productivity is increasing to 3.0 and labor costs down 1.0 percent.

Factory orders & ISM Non-Mfg Index are both come out at 10:00 AM.  Factory Orders are expect a decline of 0.7 percent due to a sharp aircraft-related decline while the ISM consensus in August is for a slight increase to 56.7 vs. 55.7 in July.  EIA Natural Gas Report is at 10:30 with the EIA Petroleum Status Report coming at 11:00 both of which do not forecast forward.  Finally the Fed Balance Sheet at 4:30 PM which is scheduled to reduce securities holdings.  We have a Fed Speaker at 10:00 AM, 6-Bond Announcements at 11:00 AM and the Money Supply report at 4:30 PM to wrap up this very full calendar day.

The Earnings Calendar also has its biggest day of the week with nearly 50 companies reporting.  Look for BKS, GIII, and NAV to report before the bell with ABM, AVGO, FIVE, FNSR, GME, MRVL, OKTA, and PANW to report after the close.

Action Plan

Futures are pointing to a modestly higher open this morning in the Dow, but the SP-500 and NASDAQ are flat to slightly lower.  Asian markets were down across the board overnight with the European markets currently holding mixed results.  There is a lot of economic news today and keep in mind the big Employment Situation report comes out Friday morning.  Light and choppy price action can sometimes occur as the market waist for that government employment number so don’t be surprised if price action happens to be a little subdued.

The bulls has did a great job of holding trends and support levels yesterday.  If they can muster the energy to follow-through to the upside today that could prove to be very bullish for the market and an opportunity for buyers.  If they are unable to push upward the selling pressure seen in the techs yesterday could trigger some additional selling.  Remember the possibility of the new China tariffs still weighs on the mind of the market as well.  Price is King so stay focused on price action and know that head fakes and whipsaws continue to be a possibility as we test support levels.

Trade Wisely,

Doug

Indecisive Price Action

Looking over yesterdays price action, I see indecisive candle patterns with bulls working very hard to defend against intermittent bear attacks.  The index trends are still clearly intact and bullish, but the cloud of a potential 200 billion in new tariffs continues to embolden the bears to test bullish defenses.  Thus far the bulls are still in control and holding above key support levels.

Unfortunately, the bulls are also having to fight against declines in Asia and Europe overnight, so futures are pointing to negative open to test the resiliency of the bulls.  Thus far the VIX has remained in check, so this could prove to be nothing more than a light volume pullback and a good setup for the indexes to move higher.  On the other hand, the tariff threat could green light a bear attack that breaks through support levels.  Watch price action closely and be careful not to anticipate and allowing your bias to cloud your view.  Whipsaw and quick price action are possible as we approach important support levels.

On the Calendar

We have an interesting Economic Calendar this Wednesday with a Fed presence as I’ve never seen before on a single day.  First, we have a potential market-moving report from International Trade @ 8:30 AM which consensus suggests will show a widening deficit to 50.2 billing vs. the 46.3 billing reading in June.  We have the Mortgage Application report at 7:00 AM and the Redbook at 8:55 but both are unlikely to move the market.  9:20 AM kicks off a parade of Fed speakers beginning with James Bullard, John Williams @ 12:30 PM, John Williams again @ 3:00 PM, Neal Kashkari @ 4:00 PM, John Willams for the 3^rd time at 5:30 PM, with Raphael Bostic finishing up @ 6:30 PM.

On the Earnings Calendar, we have just over 30 companies reporting.  Among those reporting, today are HDS, CLDR, CTRP, CWK, DOCU, GWRE, MDB, OLLI, and ZS.  Make sure you are continuing to check reporting date against current holdings or before entering new positions.

Action Plan

Yesterday saw another intra-day bear attack with a very quick selloff in the morning followed by a slow grind higher as the bulls worked to defend supports.  Although the rally was nice to see, it left behind more questions than answers with indecisive candle patterns.  While we slept Asian markets closed lower across the board with the European market following the trend also currently showing losses across the board.

US Futures are currently suggesting a negative start to today’s trading, but they have currently rallied off the lows cutting the potential gap down by nearly half at this point.  Yesterday I suggested using some caution and being careful not to overtrade because of the current price action in the indexes is indecisive.  With market around the world showing pullback it would not be a big surprise if the bears attempt to test the overnight lows.  The bulls, however, will not give up control easily so we should also watch for price action clues or bullish strength as we approach important levels of support.  Quick price action and whipsaws are likely as the bears continue to test the bullish defenses.

Trade Wisely,

Doug

Challenging Clues

A new record high in Russell and indecisiveness in the DIA and SPY certainly makes for challenging clues as to what happens next.  On the positive side, all the indexes are trending, and the bulls have shown tremendous strength with the hope of wrapping up trade negotiations with Mexico and Canada.  On the negative side, the threat of 200 billion in new tariffs against China looms heavy, and the bears have started looking for weakness with some minor attacks.

Couple that with the possibility of light volume due to extended labor day vacations and the phrase, “anything is possible,” seems to be an understatement.  The futures are pointing to a lower open, but I wouldn’t expect the bulls to give up easily.  Remember a pullback to test support within a trending market is a normal and healthy thing as long as support levels hold.

On the Calendar

Our short week begins with three potential market-moving reports on the Economic Calendar.  First, at 9:45 AM the PMI Manufacturing Index according to consensus will see a slightly decline to 54.5 in August vs. 55.5 in July.  At 10:00 AM, the ISM Mfg. Index is also expected to decline slightly to 57.6 vs. 58.1 giving some relief to backlogs and delivery delays.  Also at 10:00 AM, the volatile Construction Spending is expected to increase in July by 0.4% while continuing to experience labor shortages and higher material costs.  Other than that we have 3-Bond Auctions between 11:30 AM and 1:00 PM to round out the day.

On the Earnings Calendar, we have just over 30 companies reporting results today.  Before the bell, CONN, CASY and SHLD are among those reporting.    After the close COUP, WDAY, and RH are among those stepping up to report.

Action Plan

Friday’s choppy price action shook off the morning selling with a late day rally producing a new record high close for the Russell.  The QQQ stop just short of making a new record while the DIA and SPY left behind candles of indecision.  Asian market was mostly higher overnight although the Chinese economy continues to produce worrisome data points.  Currently, European markets are decidedly lower this morning as the threat of 200 billion in new US tariffs looms over China.

The Bulls have been solidly in control, but this morning the Futures markets are indicating a gap down open.  After such a strong run a pullback or consolidation would be healthy as long as the bulls defend support levels.  However, the bulls have been so tenacious that a rally back would not be out of the question.  Remember that many traders may have extended their holiday into this week so choppy price action and light volumes are possible.

Trade Wisely,

Doug

Traders Lifestyle

There are good days trade, and there are days when it’s better take the day off and enjoy the privileges of a Traders Lifestyle.  Facing a 3-day weekend with the possibility of 200 billion of new tariffs levied against China new week hanging over the markets head, today might be just such a day!

I have personally taken profits and trimmed my holdings all week to reduce risk heading into the long weekend.  I hope many of you have done the same, and honestly, I hope many of you are not even around to read this morning note because you have already taken off for the weekend.  If you are still here, keep in mind volumes could become very light and choppy after the morning rush.  If a trade deal with Canada come to fruition, we will likely see a flurry of activity but keep in mind profit-taking, and risk reduction will be on the mind of a good many traders today.   Plan your risk carefully and enjoy the last official days of summer this Labor day weekend!

On the Calendar

The last day of August Economic Calendar gets going with Chicago PMI at 9:45 AM Eastern.  Forecasters suggest a slight pullback from a very high level to 63.8 vs. the 65.5 reading in July on PMI.  Then at 10:00 AM Consumer Sentiment according to consensus will slightly increase to 95.5 in August.  There are 6-bond settlements today and the Baker-Hughes Rig Count @ 1:00 PM to close out the August calendar.

Today the Earnings Calendar is very light showing only five companies reporting results.  They are BFRA, CANF, RENN, RUBY & BIG to finish up the August earnings.

Action Plan

Asian and European markets seemed to follow the US turn lower yesterday with across the board losses in their major indexes.  Surprisingly US Futures are not suggesting a substantial gap down but instead indicate just modest decline at the open.  The Bulls have certainly been tenacious this week, and perhaps they have still have the energy to close this last trading day in August on a high note.  Or maybe they are holding out and hoping the trade agreement with Canada will get announced sometime before it Friday deadline expires.

Unfortunately, as we slide into a 3-day weekend and a 200 billion tariff threat against China next week could also have the bears on a prowl.  Remember this is the get-a-way day, and a lot of traders will abandon their computers in favor of celebrating Labor Day and the lasts official days of summer.  Volume could be light and very choppy after the morning rush.  Plan your risk carefully as anything is possible over the long weekend.  Have a wonderful weekend everyone!

Trade Wisely,

Doug

Tenacious Bulls

Tenacious Bulls gathered energy at the rest stop on Wednesday to once again set new records in the SPY, QQQ, IWM yesterday.  What goes up must eventually come down, but with the possibility of a trade agreement between the US and Canada by Friday, I think it would be unwise to anticipate short positions.

However, with a 3-day weekend just around the corner and the likelihood that many traders will extend the holiday by taking off Friday and/or Tuesday don’t be surprised to see some choppy light price action.  Also with the risk of market-moving news over a 3-day weekend don’t be surprised to see some profit-taking before the end of the week.

On the Calendar

Weekly Jobless claims kick off the Economic Calendar at 8:30 AM Eastern.  Consensus expects claims to come in at 214,000 showing continued strong demand for labor.  Also at 8:30 AM Personal Income and Outlays which expect incomes to rise 3.0 percent with consumer spending up 0.4 percent.  The overall PCE is looking at a year-on-year rate of 2.3 percent which is an increase of 2 percent.  At 10:30 we get the latest reading on US Natural Gas supplies, however, there is no consensus forecast.  Then at 4:30 PM the Fed Balance Sheet.  We also have three Bill Announcements at 11:00 AM and the Money Supply report at 4:40 PM.

On the earnings calendar, there are over 50 companies reporting today.  Among those reporting before the bell, DG, DTLR, SHLD, and SIG.  After the close AMBA, LULU, ULTA, and COO are among those reporting results.

Action Plan

More record closing highs in the SPY, QQQ, and IWM as the took advantage of Wednesday’s rest stop to gather energy.  Unfortunately, Asian markets closed mostly lower overnight, and European are currently slightly lower across the board.  US Futures are pointing to a lower open with the Dow currently suggesting a gap down of more than 50 points.

With the Labor Day 3-day weekend just around the corner, a little profit-taking after this strong bullish run would not be all that surprising.  However, the Bulls have shown remarkable tenacity this week, and with the possibility of a Canadian/US trade deal by Friday, I wouldn’t want to anticipate a selloff by picking up some short positions just yet.  I have been scaling out of trades and taking profits since Tuesday of this week and will likely continue to so lowering my risk as we head into the long weekend.

Trade Wisely,

Doug

Rest Stop?

After another day of record-breaking highs, the Bulls largely decided to relax at a rest stop yesterday afternoon.  The question is will the Bull finish the remaining days so August strong or will they give the Bears a chance to feed.  It’s common after a major break out to see a consolidation or pullback to test support.  Unfortunately, there is no rule as to when that might occur.

Consequently, we have to stay with the current trend but prepare for the possibility of a pullback without bias.  I have been taking advantage of the current rally by taking profits and lower my overall risk to a pullback.  It’s very important to guard yourself against over-trading at or near market highs.  I hope that this is just a rest stop, and we will close August strong, but hope never pays the bills.  Stay focused on price action and always be prepared to protect your capital if the market decides to turn south and test support.

On the Calendar

Today’s Economic Calendar has three potential market reports.  First, GDP at 8:30 AM is expected to come in 4.0 percent with consumer spending coming in at 3.9 percent and GDP price index is seen holding at 3.0 percent.  At 10:00 AM, Pending Home Sales Index expect the July reading to come in unchanged at 0.9 percent.  Then at 10:30 AM is the EIA Petroleum Status report which is not forecasted forward but has recently shown an build in US supplies.  Other than that we have Corporate Profits @ 8:30 AM, the State Street Investor Confidence Index @ 10:00 AM, Bond Auctions @ 11:30 AM & 1:00 PM, with Farm Prices @ 3:00 PM to wrap up the day.

The Earnings Calendar today shows over 40 companies fessing up to results.  Among them, before the bell is AEO, DKS, and MOV.  After the close CRM, GES, and PVH are among those reporting.

Action Plan

Another day another record high close for the SPY, QQQ, and IWM indexes.  However, yesterday the Bulls seemed to run out of energy, but interestingly enough the Bears seemed to remain in hiding.  Asian markets closed mixed while the European markets all appear to be drifting lower.  Currently, US Futures appear mixed and at the moment point to a relatively flat open.

Hopefully, you have taken advantage of the rally and taken some profits because the market seems a bit unsure at the moment what comes next.  Commonly after a big break out prices will pull back to test support.  However, this could also be just a rest stop along the way to higher prices to finish out the month strong.  Only time will tell, and we will have to stay focused on price action to find the clues.  Historically, September and October are challenging months with higher volatility, but with the market currently very strong, there is no clue to that so far.  Stay with the trend but be careful not to overtrade around market highs.  The Bears are not showing themselves at the moment, but we know there always lurking around waiting to feed on unprepared trader accounts.

Trade Wisely,

Doug

Their horns are still very sharp!

The Bulls proved their horns are still very sharp as they pushed the Bears back on the news of a US-Mexico trade agreement.  All four major indexes printed new record highs, and the only hint of profit-taking came in the IWM as it pulled back before the close.  Today the Bulls certainly have the advantage of momentum, and current Futures suggest another modestly bullish open.  However, after such a big surge in price, it would not be out of the question to see some profit-taking begin soon.

As a full-time trader with a family that depends on me, I make a habit of taking some profits when the market is showing strength.  Consequently, I went to the bank yesterday and plan to do the same today.  I’m always very grateful with the market give up profits so easily on a big surge.  As traders, we all want more, but the last thing we want to do is allow greed to prevent us from taking profits.

On the Calendar

International Trade in Goods tops the Tuesday Economic Calendar at 8:30 AM eastern and is a potential market-moving report.  According to forecasters, the good deficit will widen to $69.4 in July vs. $67.9 billion in June.  At 9:00 AM is the S&P CoreLogic Case-Shiller expects home prices to gain 0.2 percent in June holding the year-on-year at 6.5 percent.  Consumer Confidence is at 10:00 AM continues to strength expecting at the reading of 126.8 in August.  Other than that we have Retail Inventories & Wholesale Inventories @ 8:30 AM, Redbook @ 8:55 AM, Richmond Fed Manufacturing Index @ 10:00 AM, State Street Investor Confidence Index @ 10:00 AM, and Bond Auctions @ 11:30 AM & 1”00 PM to close the calendar day.

We have 40 companies reporting with BBY and TIF among those coming before the market open.  Among the reports after the bell, today is HPE and HRB.

Action Plan

A very nice bullish surge as the US and Mexico come to an agreement on trade yesterday.  The DIA, SPY, and QQQ left behind open gaps as well as closed at new record highs.  The IWM also saw a strong bullish surge but was unable to hold on to those gains throughout the day leaving behind a shooting star candle pattern.  European markets are modestly bullish across the board this morning while the Asian markets closed the day relatively flat.  Currently, the Dow futures are pointing to a modestly bullish open but with earnings and economic news before the bell that could certainly change.

Momentum up favors the bulls but keep in mind profit-taking could begin at any time considering yesterdays big move.  As the market rallies, remember to take some profits along the way.  Never want to allow greed to get in the way of taking profits.

Trade Wisely,

Doug

Let’s go Bulls!

With the Bulls solid performance on Friday and current futures pointing more bullishness this morning, I want to cheer them on with a, Let’s go Bulls!  Currently, the futures suggest that that the QQQ will join the SPY and IWM this morning breaking to new record highs.  I’m all for that, and of course, will enjoy the profits of the bullish price action and will always hope for more.

However, if I put my feet back on the ground and look at the chart critically, I also have to recognize that a breakout of resistance is only valid if the bulls can prove to hold it as support.  So as wonderful as it is to see new records being set we have to remember that is only half the battle.  That means I must still stay focused in on price action watching for clues of a bear attack.  If you have traded very long, you have heard the phrase, “pop, and drop.”  New market highs with a gap up are the perfect set up for that nasty phrase to become a reality.  So let’s cheer for the Bulls but keep in mind even when the Bears seem hidden they are always there and always hungry!

On the Calendar

The Monday Economic Calendar begins with the Chicago Fed National Activity Index @ 8:30 AM Eastern.  The Dallas Fed Mfg. Survey follows @ 10:30 AM with four bond events between 11:00 AM and 1:00 PM.  None of today’s reports would be expected to move the market.

The Economic Calendar shows 24 companies expected to report today.  Before the bell, KLXI and USAT are among those reporting with HEI being the most notable after the bell.

Action Plan

Friday’s nice broad market rally saw the SPY and IWM both close at new record highs and the QQQ just a quarter point below a record high breakout.  Even the DIA got into the game, breaking above the March high holding that level through the close of the day.  Keep in mind that the Dow has a lot of catching up to do and still more than 800 points below the January high.  Overnight Asian markets were solidly bullish across the board.  European markets are currently also bullish this morning holding gains across their major indexes.  Consequently, US Futures are pointing to follow through bullishness this morning with the QQQ currently indicating a gap to new all-time highs.

The Bulls seem very much large, and in charge, but remember breaking through to new record highs is just half the battle.  Now it’s important that the Bulls prove they can hold on to this new level as support!  As you plan your day try not to get caught up in morning hype and chase into trades well within there rally.  We want to buy stocks at or near price support.  Keep a critical eye on price action and keep in mind that a gap up to new record highs is the perfect set up for a whipsaw if the bulls are unable to support the gap.  Let’s go bulls!

Trade Wisely,

Doug

Defending Support

Although the price action yesterday was challenged by a nasty whipsaw the Bulls did a good job of defending support levels.  This morning it would seem the Bulls have gathered some reinforcements and are looking to challenge the January high in the SPY.  The SPY has been pounding on that door all week, and just maybe the Bulls can break it down today.

As you know, I like going to the bank on Friday.  The expected gap up may be just the reason I need to take some profits and reduce my weekend risk.  Stay focused on price action because market highs can produce head fakes and whipsaws.  A morning gap into resistance is a perfect setup for both so set aside your bias and be ready to react if that happens to occur.  Personally, my hope is for a breakout and run higher.  Unfortunately, I can’t pay my bills with hope.

On the Calendar

We kick off this Friday on the Economic Calendar at 8:30 AM with the Durable Good Orders.  Consensus suggests an increase of 0.5 percent with core capital goods also up 0.5 percent.  After that, we have a Fed Speaker @ 10:00 AM and the Baker-Hughes Rig Count at 1:00 PM.  Also, keep in mind there will likely be a slew of news reports from the Jackson Hole Symposium.

On the Earnings Calendar, we have a very light day with under 20 earnings reports.  Most notable would be FL, BKE, HIBB and UBNT all reporting before the bell today.

Action Plan

After a day of choppy price action and nasty whipsaw, the Bulls seemed to gather some energy overnight.  With apparently no concern for rising tariffs Asian market closed mostly higher.  European markets are higher across the board and look to finish this week on a positive note.  Consequently, the US futures are pointing to a bullish open with the Dow expected to gap more than 50 points higher.

Perhaps today is the day when the SPY breaks out to and new record high joining IWM.  That’s my hope, however, once again we have to watch carefully for the possibility of head fakes and whipsaws.  Remember volumes continue to be low, and the news will be bursting with reports out of Jackson Hole.  Remember today is a great day to put some profits in your account and a gap up morning may be just what the doctor ordered to make that possible.  Have an awesome weekend.

Trade Wisely,

Doug