The American Consumer

The American Consumer

The American ConsumerThe American consumer is alive and well according to the sales numbers during the Thanksgiving holiday.  Black Friday sales reached new record highs, and now the Cyber Monday sale topped all-time highs coming in a 6.56 billion.  The market lacked volume because everyone must have been online looking for deals.  As those credit cards begin to cool down the Tax bill in Congress is seriously heating up.  Even the President himself is working the Hill trying to secure enough votes to pass this major reform bill.  Expect the market to be sensitive to the news on the bill’s progress.  Big an very fast price action moves could be possible as the potential votes are won or lost.  Let’s hope the Presidents Twitter feed remains quite on the subject!  Plan accordingly.

On the Calendar

We kick off the day on the Economic Calendar with the 8:30 AM Industrial Production report.  October is expected to widen the deficit from 64.8 billion to 64.1 September.  There will also be an advanced report used for GDP inputs.  At 9:00 AM is the Case-Shiller home prices number which consensus expects a 0.4% increase in September.  At 10:00 AM we get the Consumer Confidence Report which last month was at a 17-year high but is expected to pull back slightly to 124.5.  We have Fed Speakers at 9:15 and at 10:00 AM as well as several other nonmarket-moving reports.

On the Earnings Calendar, we show 46 companies reporting today with the biggest group coming after the bell.  ADSK, MOMO, AABA, and MRVL are some worth noting.

Action Plan

Yesterday the market just seemed to wander around lacking volume an purpose.  Pretty much as expected with extended vacations and Cyber Monday shopping.  Unfortunately, the lackluster day left behind questionable daily candle patterns hinting of slight bearishness not nearly enough to shift the bullish trend.  This morning Futures are pointing to a gap up open on the back of a new record with more than 6.5 billion in Cyber Monday sales.  A very good week to be in the shipping business!

I will continue to look for new trade entries, but I will not chase or force trades.  Trading for the sake of having something to do is unwise.  I get the sense the market is waiting around to see if Congress follows-through on their Combo Tax Bill – Kill Obamacare plan.  A failure to pass could move the market sharply lower so expect the market to be very sensitive new reports.  Very fast reversals as this congressional battle progress and the Washington spin machine whips up the drama.

Trade Wisely,

Doug

Back to Work?

Back to Work?

back to workWith the holiday behind us and the Black Friday shoppers, credit cards still smoldering its time to get back to work.  Or is it?  Those clever retailers will have much of the online-shoppers testing their credit limits with the so-called Cyber Monday deal.  Many folks will be back at work, but you can bet their productivity will be lacking as they chase the next flash sale to hit the internet.  Keep in mind that the market will be sensitive to the sales numbers produced today.  With many traders likely extending the holiday with vacation time and the millions of Cyber Monday shoppers focused on typing in credit card numbers don’t be surprised to see light volume and choppy price action today.

On the Calendar

The Economic Calendar begins the week with a potential market-moving report at 10:00 AM eastern.  New Home Sales surged to in September with the largest percentage gain in 28 years and reaching a 10-year high.  As a result, the consensus for October new home sales is for a sizable step back to 660K vs. 667K in September.  AT 10:30 AM the Dallas Fed MFG. Survey continues to remain strong showing little to no effect from hurricane Harvey.  Go Texas!  Consensus for November expects a strong print of 24.5.  There are several bond auctions today as well as two Fed Speakers this evening at 6:00 and 7:00 PM.

There Earnings Calendar shows just over 30 companies reporting results today.  I quickly scanned the list, and I don’t see any big name market-moving reports.  However, unknowingly holding a company that’s reporting can certainly move your portfolio.  Please make sure to continue checking reporting dates.

Action Plan

As you all know, I went into the Thanksgiving weekend very light in my accounts.  Consequently, I will be actively looking for new trades this week.  During the evening Futures were headed lower, but around 1 AM they began to rally and currently suggest a modest gap up this morning.  On Friday both the SPY and the QQQ’s closed at new record highs while the DIA and IWM choose to consolidate.  The QQQ’s have gained market leadership, and as of now, the DIA appears the weakest and not quite able to breakthrough price resistance highs.

On Friday the VIX made a new historic low dipping to 8.56 but quickly seemed to reject that low rallying more than a full point higher.  Volume could continue to be light today as may traders likely extended the holiday with some vacation time.  With the VIX so low I would also not be surprised to see a bit more volatility.  Watch for whipsaws and head fake’s and don’t rule out the possibility of full reversal patterns.

Trade Wisely,

Doug

 

Bears in a Hurt Locker

hurt lockerThe Bulls executed a perfect blitz yesterday, overwhelming the Bears and putting them in a hurt locker.  For those of us that stayed with the trend, the rewards were fantastic and a reminder to avoid predicting a top.  We had new Record High Closes on all the major indexes as this historic bull run continues.  Today after the early morning rush I’m expecting the volume to drop off dramatically for 2-reasons.  First, traders will extend the holiday and today will be the big get-away-day.  Secondly, we have the FOMC minutes coming out this afternoon, and price action normally gets light and choppy ahead of the release.  I won’t totally close the door, but I will say it’s highly unlikely that I will add any new positions today.  In fact, I will look for profit taking opportunities to reduce risk ahead of the holiday.

On the Calendar

The Wednesday Economic Calendar is a busy one with several potential market-moving reports.  8:30 AM Eastern, Durable Good Orders – Consensus expects a 0.4% increase in durable good orders, take out transportation the number rises to 0.5%.  The core capital goods are expected to increase by a very healthy 0.5%.  Also at 8:30 is the weekly jobless claims that forecasters see rising from 240K to 249K largely due to Puerto Rico hurricane victims.  Consumer Sentiment comes out at 10:00 AM and is seen remaining historically high at 98.1.   10:30 AM brings the EIA oil status report which has been showing supply increases as demand declines.  Finally at 2:00 PM, the FOMC Minutes, rounds out the day.

We only have just over 30 companies reporting today but keep an eye on DE as it reports before the bell and could easily move the Dow index.

Action Plan

New records for all of the 4-major indexes as the Bulls squeezed early short traders into covering trades.  I must admit I was tempted to put on some short trades last week, but after a close look at the charts I stuck to my rules and stayed with the trend.  As a result, Right Way Options members took several very nice profits yesterday.  As of right now, the Futures are suggesting more bullishness at the open with Dow gaping higher about 30 points.  Of course, all the economic news and earnings reports could extend or erode the morning sentiment.

As per the plan, I have taken profits this week thus lowering my risk as we head into the holiday.  Honestly, there is not a thing wrong with the charts.  The trend is still very much intact but anything is possible, and I want to enjoy the holiday knowing a large portion of my capital is safely tucked in.  Of course, I will continue to hold a few positions, and long-term holdings will not change.

Trade Wisely and Happy Thanksgiving!

Doug

Defend Price Support

Defend Price Support

Defend Price SupportIt was nice to see the Bulls step up and defend price support levels yesterday.  Futures are suggesting the first directional follow-through in the Dow for the last 5-days of trading.  Even the Dow Transports, (IYT) held support suggesting at least a short-term rally could be in the cards.  The VIX which was stubbornly clinging to price support level finally gave way to bullishness sinking sharply by days end.  Let’s keep in mind that even though the futures are pointing to a nice gap up that Thanksgiving is just 2-days away.  Volumes could begin to drop off quickly at any time.  Even the best of trade signals can and will stall if volume dries up so keep that in mind as you plan.

On the Calendar

On today’s Economic Calendar we have the very important Existing Home Sales at 10:00 AM Eastern.  Home sales rose slightly by 0.7% in September to a 5.390 Annualized rate.  Forecasters are suggesting a solid growth in home sales with an expected October print of 5.440 million.  There are a couple of mid-day bound auctions, but then at 6 PM, Janet Yellen Speaks.

On the Earnings Calendar, we have just short of 60 companies reporting earnings today.  LOW has already reported better than expected results this morning.  Others include CPB, JEC, KIRK, MBT before the bell and CPRT, CRM, GES, DRYS and GME after the bell.

Action Plan

The market opened a bullish yesterday but a bit on pins and needles with the question; Will the Dow hold at support?  The answer came back as yes and now requires a bullish follow-through to confirm.  Both the SPY and QQQ’s turned in a lackluster performance yesterday while the IWM continued to show life rallying back toward resistance.  As I write the Futures markets are bullish across the board suggesting might actually see the second day in a row in the same direction.  Something we have been unable to do for the last five trading days!

Of course, I will continue to manage current positions, but as we move toward the holiday, I will be watching closely for reasons to take profits and reduce risk.  I will also continue to look for new entries and building the watchlists of qualified stocks.  Be prepared for the possibility that volumes could begin to drop off quickly as Thanksgiving approaches.  Great by signals produced in the morning rush can easily die on the vine as volumes drop into the afternoon.  Remember it’s the big institutions that move the market.  As their traders pack up for holiday vacations volumes can drop quickly, and the price action becomes choppy, boring and virtually untradeable.  Keep that in mind as you prepare plans for the remainder of the week.

Trade Wisely,

Doug

Deadlocked

Deadlocked


deadlocked
Typically the week of Black-Friday the retail stocks put the markets higher in anticipation of the holiday spending frenzy.  A quick look at the ETF, RTH on a weekly and monthly chart you will a very nice breakout to new has occurred suggesting a rally is possible.  However, a quick look at the indexes and we see up-trends but also a tightly range-bound price action in the DIA, SPY and the QQQs.  The Bulls and Bears appear deadlocked in a rising volatility environment.   Because of that, I suggest a little caution is in order.  If the DIA breaks down through price support, the Bears could gain the advantage.  On the other hand, if the QQQ can breakout to new record highs the Bulls could gain the edge.  We don’t want to bet caught in this struggle because very quick reversals can happen leaving us staring at large losses.   Focus on price action!  Clues to which side gains the advantage will always appear there first.

On the Calendar

On the Economic Calendar today we have a very light day.  First Leading Indicators at 10:00 AM and then bond auctions and announcements.  None of which would be expected to move the market.  Keep in mind this is also a Holiday Week which could volumes begin to decline by mid-week making for choppy price action.

On the Earnings Calendar, we have just over 50 companies reporting today.  URBN will report this morning, and INTU and PANW are among the afternoon reports.

Action Plan

During the evening futures where sliding south at a pretty quick rate.  At my last look before going to bed, the Dow Futures were down nearly 60 points.  About 2 AM Futures began to turn around clawing their way all the back to even.  As of now, futures are mixed and almost even with Friday’s close.  Today the DIA is my biggest concern holding just above price support with a bearish price pattern.  Thursday’s big rally now appears on the DIA as a lower high.  The SPY and the QQQ’s are in better shape having left behind and inside day.  Last week I wrote a lot about the importance of follow-through.  As of now, last Thursday’s rally has not only not been unable to follow-through, but the DIA completely reversed on Friday.

As a result, the market is between the preverbal rock and a hard place.  A follow-through down in the DIA will test and could even break support possibility emboldening the Bears.  All the major averages are currently below resistance levels with the QQQ having the best chance of breaking to new highs.  If by chance the QQQ’s can muster the energy to break out the Bulls might be emboldened to push the SPY and the DIA higher.  As the indexes are in a pretty tight price range, there is not a lot of room for error.  Remain flexible and focused on price action for clues.

Trade Wisley,

Doug

Copy paste this link into a browser to watch the video.  https://youtu.be/-Uk1juPZC6Q

Follow-through

Follow-through is Required

Follow-throughThe relief rally was just what the doctor ordered.  Trader everywhere got that familiar warm and fuzzy feeling that the Bulls are back in control.  While it’s true, the Bulls produced wonderful reversal patterns in the index charts let’s not forget Follow-through is Required.  One day does not make a trend!  Please understand I’m not suggesting bearishness of any kind.  I’m merely pointing out how important it is to see the price action as it is, not as we would like it to be.  The indexes are at or near all-time-highs which means resistance requires consideration in your planning.  Go Bulls!

On the Calendar

The Friday Economic Calendar kicks off at 8:30 AM with the potential market-moving Housing Starts report.  The September housing starts number fell sharply to 1.127 million.  Multi-family units were particularly weak while single-family units gain ground.  The October consensus expects a 1.190 million rate for starts with permits rising to 1.250 million.  After that, we have a couple of non-market-moving reports and a Fed Speakers at 12:45 PM.

On the Earnings Calendar, we have about 20 companies reporting today.  Retail seems to be the theme today with BKE, ANF, and FL.  DRYS is another notable but be careful this one can be really wild.

Action Plan

Yesterday’s short squeeze delivered nice reversal patterns in the all of the four major indexes.  The QQQ’s even managed to print new record highs during the day but settled back down to close at the exact high set on 11/8/17.  Amazing!  So, now what?  As great as that move was we have to remember that one day does make a trend!  That means it’s going to be very important for the market to show us some follow-through bullish price action.  The DIA, and the SPY, still have price resistance above and the QQQ’s closed exactly at the resistance high.  Although the IWM rallied strongly yesterday, it still has a lot of heavy lifting to do before we will see a bullish trend in the small-caps.  So, come on Bulls dig in and push hard.

As you know on Friday’s I, tend to focus on taking profits rather than adding new risk ahead of the weekend.  However, I will be building a shopping list for next week.  Of course, I never want to say never so if a great opportunity presents itself I will be more than happy to exploit it for profits.  I wish you all a fantastic weekend.

Trade Wisely,

Doug

Watch the Morning Video Here: https://youtu.be/FLpNCuV4qvI

Defend Price Support

Defend Price Support

defend price supportIn yesterdays morning video I mentioned that it was going to very important for the Bulls to defend price support.  After a nail-biting dip below support to strip out tight stop-loss orders; the Bulls began to stand their ground and push back.  As always the important thing now is that they follow-through with a push higher and close the day above yesterdays high.  A failure to do will embolden the Bears and keep the current downtrend intact.  With a strong enough effort by the Bulls, a short squeeze could trigger if there are enough early short-hands betting against the market.

On the Calendar

Thursday’s Economic Calendar begins with three reports at 8:30 AM Eastern time.  The Weekly Jobless Claims consensus is for a reading 236K vs. the 239k last week.  Puerto Rico, however, remains a bit of wildcard on the jobless front.   The Philly Fed Mfg Index is expected to report 25.0 for November vs. the 27.9 October print.  The consensus for October Import prices is 0.4% with export prices expected at 0.1%.  At 9:15 AM forecasters are calling for 0.5% gain in Industrial Production for October with manufacturing production expected to increase by 0.3%.  Overall capacity utilization is seen rising to 76.3%.  The Housing Market Index at 10:00 AM is forecast to see November at 67 vs. the October 68 reading.

We have three Fed Speakers on the calendar today speaking at 9:15 AM, 1:10 PM, and 3:45 PM.  On the Earnings Calendar, we have just over 70 companies expected to report today.  Before the bell, we will hear from HP, SPLS & WMT and after the bell ROST, POST & GPS are just a few notables fessing up.

Action Plan

Yesterday saw the Bulls do a pretty good job of defending support levels on the DIA, SPY, and QQQs.  Unfortunately, the Bulls lacked the strength and motivation to fill the morning gap.  As of right now, the Dow Futures are suggesting a gap up of about 40 points but this earnings reports and a heavily laden Economic Calendar that could easily change.

As for me, I plan to continue exercising caution on new positions until I see the current short-term downtrend broken to the upside.  Of course, I will closely monitor current positions and prepared to take some profits as we move toward the weekend.  Remember volatility has increased so keep in mind fast intra-day swings are possible.  I’m guessing this week has produced a significant number of short sellers.  If the Bulls have the strength, this would be a very good place to trigger a short squeeze.  On the other hand, if the Bears maintain control, a failure here could create a rush for the doors.  I guess what I’m saying is be prepared for anything.

Trade Wisely,

Doug

Party Crashers

Party Crashers

Party CrashersUnfortunately, the Bears have decided to be party crashers today with a mean overnight reversal.  I have over the last several days suggested raising caution levels and slowing market activity.  As there were temptations everywhere in the charts, it was very difficult to maintain discipline.  I stuck to my plan, and this morning I’m being rewarded for doing so because I have protected my capital.  The VIX will likely see a sharp rise this morning opening the door for some very fast price action.  I suggest new or inexperienced traders stand aside as the price action will likely become very challenging.  Remember CASH is a position and in times like this can be the very best position!

On the Calendar

We have a busy Economic Calendar today,  At 8:30 AM Eastern there are two very important potentially market-moving reports, Consumer Price Index and Retail Sales.  Forecasters see the overall CPI rising 0.1%.  Year-on-year is seen at 2.0% with the core number at 1.7%.  Retail Sales is looking for  October to rise by 0.1% as well with core readings as high as 0.4% indicating a fundamental strength in consumer spending.  Also at 8:30 the less important report from Empire State Mfg Survey.  Consensus expects a 26.0 reading for November vs. the October 30.2 which was a historic high for the Survey.

Business Inventories expected to rise 0.1% at 10:00 AM and at 10:30 the EIA Petroleum Status is expected to show a decline in overall demand.  Keep in mind the oil number can be a big market mover.  At 4:00 PM is the Treasury International Captial report as well as Fed speaker, but both are unlikely to move the overall market.  There are over 70 companies reporting earnings today on the Earnings Calendar so stay on your toes and continue checking dates.  TGT, TJX, and DKS will report before the bell placing a high focus on retail.

Action Plan

Another grinding day in the market yesterday where the Bulls pushed back after the morning gap down.  The rally back up looks to have been a Bull trap considering the current futures readings.  The clues in price action have been subtle however they have been there, and I have continued to suggest raising caution levels.  Currently, the Dow Futures are suggesting a gap down of more than 100 points.  Support levels in the DIA and SPY will require a strong Bull defense or could easily fail.  If it support levels happen to break, prepare for the possibility of a quick and nasty selloff as stop-loss orders begin to trip in rapid succession.  Expect a substantial increase in volatility at the open making for fast intra-day reversals and mean whipsaw price action possible.

The Bears appear to have gained at least a short-term upper hand, but I don’t expect the Bulls to give up without a fight.  Don’t panic, focus on your trade plan.  Consider taking profits on winning trades and allow stop-loss orders to protect your capital.  Avoid the urge to chase the gap and never involve yourself in revenge trading.  If your emotions seem out of control, then set your stops and walk away from your computer until your head for good business decisions returns.

Trade Wisely,

Doug

Bulls Step Up

Bulls Step Up

Bulls Step UpAfter the gap down open it was nice to see the Bulls step up.   They left behind bullish candles in the DIA, SPY, and QQQ.  A very good sign but now it’s critical they follow-through to confirm.  After the morning rally, the bullishness seemed to die on the vine with light volume chop dominating the rest of the day.  A Concern? Maybe.  The VIX also seems to register a concern with a slightly higher close yesterday.

There is certainly no reason to panic.  As of now the trends in the market continue to be bullish. However, there is also a reason not to be complacent.  Plan your trades carefully and be diligent with your trade management.  Take some profits into strength and carefully manage stop loss orders.  Avoid over trading and make sure your trades are sized correctly to your risk tolerance.  Of course, this is a good course of action at all times saving your hard-earned capital and reducing emotional trading in the heat of the moment.

On the Calendar

Today on the Economic Calendar there are 2 Fed members and Janet Yellen speaking even before the market opens.  Such an ambitious group.  At 8:30 AM Eastern is the PPI-FD report.  For, October, forecasters are expecting a core 0.1% increase vs. the September increase of 0.4%.  Remove food and energy, and the number is 0.2% and remains the same with trade services excluded.

Today marks the last really big day of this earnings season.  There are 290 companies set to step up and report today.  HD, TJX, BZH, LMT & MBT are reporting just to name a few.  There are still a lot more earnings to come, but they roll out a  much slower pace going forward.

Action Plan

The DIA, SPY, and QQQ had a much better day with the Bulls stepping up after the gap down open and producing bullish engulfing candle patterns.  That is a very good sign but keep in mind; price must follow-through today to confirm.  Currently, futures are flat to slightly lower but with the PPI report and so many earnings reports that could easily change.

Currently, the trend is higher except for the poor IWM which just can’t seem to get its act together.  In the past, IWM has served as an early warning to future market direction.  I would never trade based on that signal but is a reminder not to become complacent in trade planning and risk management.  As good as yesterday was take note that the VIX didn’t respond by moving sharply lower but made a small gain.  Higher volatility can lead to quick reversals and challenging price action.

Trade Wisley,

Doug