History-making bull run.

New records across the board as the market reacts to the government closure coming to an end.  The bulls are running so hard it makes you wonder if their hearts could suddenly and without warning explode.  One thing for certain, I’m grateful that I can participate in this history-making bull run.  The futures have traded all over the place this morning.  I can only guess its due to the tsunami warning for the west coast after a big earthquake in Alaska.  The price action has been very fast so be careful at the open and for goodness sake don’t chase.  There will be a day when the tide will go rushing out, and profit-taking will begin.  Avoid complacency and have a plan to protect profits and capital if/when it occurs.

On the Calendar

Tuesday is another very light day on the Economic Calendar.  The is a Richmond Fed Manufacturing report at 10:00 AM which is very unlikely to move the market.  A couple bound auctions and a Fed Speaker after the market close at 6:30 PM.

On the Earnings Calendar, there are 67 companies expected to report earnings.  Please make sure you are checking reporting dates of companies you own or those you are thinking of buying.  Today we have a showing of some big blue-chip stocks like KMB, VZ, JNJ, and PG.  Reporting after the bell is TXN, CREE, and UAL.

Action Plan

Due to a family emergency, I had to quickly lever yesterday missing out on the surge higher.  Record highs in all four major indexes occurred as buyers rushed in after the news that the government shutdown was over.  If you thought the market looked overextended before the yesterday stretched that rubberband even tighter.  NFLX reported blow out earnings after the bell and futures were very bullish all night.  However, starting at 6:00 AM Eastern the futures suddenly started moving south and at this moment are continuing to do so.  The price action is very fast, so anything is possible by the open.

Without question the bulls are in control and the market trends are higher.  However, the market also appears to very extended which could trigger some profit-taking at any moment so I think it would be wise to exercise a little caution.  The current erratic price action in the Dow Futures should be a reminder just how quickly a shift could occur so stay on your toes.  Having said that earnings could continue to propel the market higher so avoid prediction and trade the price action making sure not to chase stocks that are already well within their run.

Trade Wisely,

Doug

Cautiously Optimistic

This weekend a friend asked me for my overall opinion of the market.  My answer was Cautiously Optimistic.  If you look at the economic markers such as jobs, interest rates, business growth, and wage growth, it’s pretty darn hard to be anything other than optimistic.  A quick look at the index charts and all you can see is bullish trends.  So why the caution?  The short answer is the appearance of extreme complacency.  Almost nothing seems to shake this market.  Look at the same index charts with a critical eye and its hard not see a bit of complacency.  The question on my mind is can earnings support these price levels or has complacency pushed us to high in anticipation?  As a result, I’m Cautiously Optimistic as we move into the bulk of earnings reports.

On the Calendar

A slow start to the Economic Calendar this week, with no market-moving reports and just a few bond auctions.  Perhaps that’s a good thing as the market deals with day-3 of the government shutdown and all drama whipped up by both sides of the aisle.

There are just over 40 companies reporting earnings today with HAL, PETS, & WYNN before the bell.  After the bell, Tech will be in focus as NFLX will dominate the earnings news.

Action Plan

Friday’s market saw a Dow index and the Dow Futures oddly decouple.  A good portion of the day the Dow index was trying go down while the Dow Futures relentlessly pushed higher.  Ultimately the Index closed positively, but the futures were sharply higher.  The SPY, QQQ and the IWM all closed at new record highs.  Price action overall seemed to rather slow and choppy as we heading into the weekend.

Futures this morning are pointing to a lower open as the market reacts to the government shutdown.  Currently, Dow Futures are pointing to a gap down of about 40 points.  I’m honestly surprised the reaction isn’t stronger considering the stretched overall condition of the market.  With no economic reports to react to the market may be a bit more sensitive to the congressional news as its spun one direction and then another.  Earnings reports really begin to ramp up this week.  Our first big tech report is after the bell today with NFLX steps up to report results.  Don’t be surprised to see higher volatility companies must prove these elevated levels can be justified.  There is a lot no the line!

Trade Wisely,

Doug

Shocking!

A day without new record new record highs?  Shocking!  It would seem the Bears are starting to test the strength of the advancing Bulls with little attacks here and there.  The results of this minor skirmishes have thus far proved the Bull is strong and unwilling to yield even a little.  Does that mean we should toss caution to the wind and chase into this rally?  Absolutely not.  Chasing with the fear of missing out cost me a lot of money over the years as I was learning my craft.  If you are going to buy look for stocks that are finding buyers at or near price support levels.  Futures are bullish this morning, and trends are still solidly pointing up so stay with the trend but choose your risk wisely.

On the Calendar

The Friday Economic Calendar is a light one for a change.  At 10:00 AM Eastern we get the latest reading on Consumer Sentiment which consensus it expecting an increase to 97.0 vs. Decembers 95.9.  Other than that Fed speaking tour continues with one at 8:45 AM, then 1:00 and 1:30 PM.

The Earnings Calendar is also light today with only 17 companies reporting earnings today.  Most notable are those reporting before the bell such as RF, CFg, FHN, KSU, and SLB.  Keep in mind that earnings reports ramp up heavily next week.  Make sure you are checking dates on positions you hold and those your thinking of buying.

Action Plan

Although there were a couple of intra-day bears attacks, the bulls managed to hold the battle line with relative ease.  During the evening there was an attempt to move the futures lower, but once again the bulls were not interested in giving up any ground.  Also during the evening, the US House passed a tempory spending bill.  Now it’s up to the Senate to prevent the government from shutting down at midnight tonight.  I don’t know about you, but this drama is getting old.

Despite the political drama and the intermittent bear attacks the futures market is putting on a confident face.  As I write this, the Dow futures are pointing to a gap up open, and the NASDAQ could set new records at the open.  Go Bulls!  Stay with the trend but keep in mind that gap up opens can be very whippy so avoid chasing.  As always I will be focused on profit taking more than adding new risk as we head into the weekend.  However, I will be looking for trades, and anything is possible.

Trade Wisely,

Doug

More buyers than sellers! 

Why?  More buyers than sellers!  Yesterday was nothing short of amazing as the bulls squeezed out any and all would be bears that dared to get short Wednesday.  Does the market appear very stretched? Yes.  Does that mean it must necessarily selloff?  Obviously not!  Everything seems to be coming up roses for the market.  Employment is very strong; businesses are growing, wages are increasing, manufacturing is on the rise, consumer confidence is near all-time highs, housing is strong and although rising rates are still historically low.  Now the question is can earnings growth justify current prices?  Early reports seem to suggest that the answer is, Yes.  Will it continue?  Only time will tell.

On the Calendar

The Thursday Economic Calendar has three important reports at 8:30 AM Eastern time.  First, we have Housing Starts which consensus is expecting a slight pullback to 1.280 million vs. 1.297 million annualized.  November permits are expected to come in at 1.300 million vs. 1.303.  Second, is Weekly Jobless Claims are expected at 250k a slight decline from last week.  The third is the Philly Fed Business Outlook continues to show enormous strength with backlogs building as new orders pour in faster than shipments can move out the door.  At 11:00 AM is the EIA Petroleum Status Report which has shown supplies trending lower with the cold winter demand increasing.  After that, we have a one Fed speaker at 6:05 PM, some non-market-moving reports and bunch of bond actions to round out the calendar day.

On the Earnings Calendar, we have more than 45 companies expected to report today.  Banking continues to be in focus such as KEY,  PACW, and MS before the bell.  JBHT is also notable before the bell today with IBM and AXP in focus after the close today.

Action Plan

Talk about a big daily price action whipsaw!  The Dow gained more than 300 points completely reversing the big selloff just the day before.  The Dow closed for the first time above 26,000 as early short traders were squeezed out by this raging bull.  The SPY and QQQ also posted new closing records while IWM lagged slightly behind but recovering significantly from Tuesday.  Although the market appears to very stretched, the simple fact is there are still more buyers than there are sellers.  Fear of a market correction seems non-existent as the bulls relentlessly charge higher.

As always I will stay with the trend, but I must admit to being very cautious about the wild enthusiasm the market is displaying.  Bullish complacency such as we see right now can quickly backfire so stay very focused on price action for clues.  With the futures pointing to a bullish open try not to get caught up an chasing stocks already well within a run.

Trade Wisely,

Doug

Gift of the Huge Gap

A market top or just a hesitation?  Clearly, traders opened the gift of the huge gap up open yesterday ringing the resister to protect profits.  Amid all the speculation that this was a market top lets remember that one day does not make a trend!  While it’s true, the market appears stretched and could benefit from a rest or pullback don’t expect the bulls to give up that easy.  There are several very big earnings reports today that could move the market, and I think most are expecting positive results.  Will it be enough to support this lofty market level is the question?  Higher volatility is likely as battle lines develop between the bulls and the bears.  Market sensitive is also likely as we move closer to a federal government closure unless Congress can get its act together.  The road ahead could have big potholes so make sure you have a well thought out plan.

On the Calendar

The Wednesday Economic Calender gets going at 9:15 AM with the latest reading on Industrial Production numbers.  Forecasters see industrial production rising 4.0 in December with total capacity utilization moving up to 2 tenths to 77.3%.   At 10:00 is the Housing Market Index which consensus is calling for a very slight for January to 73 vs. Decembers 74 reading.  Then at 2:00 PM, the Beige Book, comes out which is a report on economic conditions used at FOMC meetings.  We have three Fed Speakers today at 3:00 PM and 3:15 PM and finally 4:30 PM.  The report on Treasury International Capital which tracks the flow of financial instruments in an out of the U.S is released at 4:00 PM.

On the Earnings Calendar, we have 30 companies expected to report today, and several of them could be market moving.  Before the bell, we have GS, BAC, SCHW, FAST and USB.  After the bell, we will hear from, AA, FNLC, HBHC, and KMI.

Action Plan

Yesterday traders remembered the sell button location on their brokerage platforms taking advantage of the huge morning gap.  All four of the major indexes managed to set new record highs before selling began with the DIA breaking above 26K briefly.  As spooky as it might have seemed let’s keep in mind that a one-day pullback does not a trend make.  In fact, at the close of the day, all the major indexes are still above their rising trends.  What will be very important is if a follow-through day so selling occurs.  However, as I write this, the Dow futures are pointing to gap up of more than 120 points suggesting the bulls are prepared to fight.

Keep in mind; we have a bunch of big earnings report this morning that could move the market substantially before the market open.  Yesterday turned out to be one huge whipsaw, and I would not be at all surprised increased volatility continue for the next several trading days.  Price action around market highs can experience very fast reversals in either direction.  Also, remember the market could react sharply on the washing spin as we approach a federal government closure if a budget bill deal passes.

Trade Wisely,

Doug

Stampede of Bulls

The 2018 Stampede of Bulls rages onward and upward.  They have been running so long, and so hard you would think their hearts would soon explode.  Any bear that predicted they would soon stop has perished under their pounding hooves.  If you long the market stay long the market until price action clues suggest profit taking has begun.  If you’re on the sidelines then for goodness sake don’t let the fear of missing out convince you to chase this late in the rally.  As profits grow in such a strong bull run, so does the pressure on traders holding positions.  No one wants to sell to soon yet we all know a roll-over cold begin at any time.  My only advice, don’t allow greed get in the way of taking profits.  Consider scaling out to reduce the pressure and prevent emotional decision making.

On the Calendar

Only one important report on the Tuesday Economic Calendar.  At 8:30 AM the Empire State Mfg. Survey is expected to remain very strong at a consensus of 18.6 vs. Decembers 18.0 reading.   After that we have three bond auctions and believe it or not, no fed speakers.

On the Earnings Calendar, we have 23 companies stepping up to report quarterly results today.  Among them are UNH and CSX which both report before today’s bell.

Action Plan

Just when you think this market couldn’t get any more bullish, it does.  With 3-200 point days already this year, I believe this might be the strongest start to a year in my 28 years of trading.  Once again all four of the major averages closed at record high levels on Friday reacting to strong bank earnings.  Personally, I think the market seems excessively exuberant.  However, this morning futures are a perfect example of why it’s unwise to bet against such a strong trend.

As I write this, the Dow Futures are pointing to an opening gap of more than 200 points.  Who could have imagined that just 7-trading days after breaking through 25,000 the market could open above 26.000?  Remarkable bullishness indeed!  With such a massive gap up to new market highs chasing an entry would obviously be unwise.  Stay with the trend but also remain laser-focused on price action.  Logic would suggest profit taking could begin at any time but don’t try to predict when that might occur.

Trade Wisely,

Doug

Let the good times roll!

Yesterday I mentioned that I would not be surprised to see the rest and even slip into consolidation.  The Bulls obviously had other plans, setting new record highs in all the major indexes.  It seemed as if the entire world suddenly became worried that they were missing out and started buying with both hands.  Let the good times roll!

Yesterday’s rally was not only strong it was very widespread with strength even in microcap stocks.  As we head into the weekend, let’s not forget to take some profits and be thankful for the relative ease at which they occurred.

On the Calendar

The Friday Economic Calendar begins with two very important reports.  At 8:30 AM eastern is the Consumer Price Index which forecaster see rising 0.1%, less food and energy the and the number grows to 0.2%.  Year-on-year, the consensus gain is expected at 2.1% with the core at 1.7%.  Also at 8:30 is the very important Retail Sales that includes holiday spending.  December Retail sales expect an increase of a strong 0.5% with ex-auto sales at 0.4%.  10:00 AM brings the Business Inventories which forecasters see a 0.3% build for November inventories.  We have two Fed speakers today, one at 12:30 PM and another at 4:15 PM to close the calendar week.

On the Earnings Calendar, we have 18 companies reporting with the big banks in focus today.  Blackrock already reported very strong results and had increased their assets under management to a whopping six-trillion!  We will also hear from PNC, JPM, and WFC today.

Action Plan

The bulls were out in force yesterday closing all four of the major averages at new record highs.  Also, surprising was the strength across almost all sectors.  And it would appear that the bulls want even more with the Dow Futures currently pointing to a gap up of nearly 100 points.  Go, Bulls go!

As normal I will be much more focused on taking profits as we head into the weekend than adding additional risk.  We should also keep our emotions in check because all the rampant enthusiasm in the market it would be easy to chase an over-trade.  If you do add new trades today make sure you are entering low-risk positions that are at or near price support levels.  Don’t become complacent and stay focused on price action clues.  It may seem as is the market will never again selloff right now, but we all know the day is coming so stay focused.

Trade Wisely,

Doug

Resiliency

After bearish gap down yesterday the bulls proved their horns continue to very sharp recovering almost all of the losses.  The ViX indicated a little fear was creeping in at the open, but the resiliency of the bulls quickly began to put those fears to rest.  Market trends continue to be strong yet appear extended.  It’s very important not to over-trade or chase during periods like this.  Choose new trades wisely with low-risk entries and consider releasing the pressure on winning trades by taking at least partial profits.  With earnings season about to kick off plan for move volatility and overnight gaps as the market responds.  Focus on price action, stay disciplined to your rules and prepare for anything like the market continues to push the upper boundaries of this strong bull run.

On the Calendar

Thursday’s Economic Calendar kicks off at 8:30 AM with two potential market-moving reports.  First is the weekly jobless claims that are expected to decline 5000 to 245k vs. 250k.  Second is the PPI-FD which forecasters think will rise 0.2% vs. the 0.4% increases each month last quarter.  There are a couple of lessor reports and a bunch of bond announcements during the day but nothing likely to move the market until the 2:00 PM Treasury Budget.  The Treasury deficit is expected to come in at $36.0 billion for December.  Then at 3:30 we have a Fed speaker as their speaking tour continues.

On the Economic Calendar, we have 18-companies expected to report.  If very important to get into the habit of checking the reporting dates of stock you own an those that you are planning to purchase.  Failure to do so can be a very costly mistake that traders can easily avoid with a little preparation.

Action Plan

Yesterdays gap down was a wakeup call that the bears are still here and hungry.  However, the Bulls really went to work yesterday to recover most of the initial losses.  This morning the futures a suggesting a slightly higher but mostly flat open today.  Although there are some earnings today, the market could wait for the big bank earnings on Friday to look for inspiration.  Also on Friday, we get the very important CPI report and Retail Sales numbers which are both market-moving reports.  As a result, we could see light and choppy price action today as we wait.

The trends are still in place so I will continue to trade with the trend, but I will also take into account that the market appears extended when considering new risk.

Trade Wisely,

Doug

Who poked the Bear?

Okay, who poked the Bear?  Most reasonable thinking traders have expected a market pullback while secretly hoping the bears would not come back to work at least for a while longer.  After all who wants the party to end?  It seems unfair when the market makes an overnight reversal that traps the retail trader, but that is the nature of this business.  As an inexperienced trader, I would always try to assign blame to someone or something when I lost money on mornings like this one.  When the truth of the matter was the blame, was mine and mine alone.  When the market was super bullish, I would chase, trades like a madman never once evaluating the condition of the overall market.  Remember trading is a business and the buck always stops with you!

On the Calendar

The hump day Economic Calendar gets going at 8:30 AM with the Import and Export Prices.  Consensus for December has imports up 0.4% and export prices at 0.3%.  Talking about interest rates seems to be in vogue this week with four Fed speakers today.  Evans at 9:00 AM, Kaplin at 9:10 and then again at 10:15 with Bullard at 1:30 PM to finish up today’s tour.  At 10:30 AM is the EIA Petroleum Status Report which could be very important today with the recent rally in oil.

There are 14 companies expected to report today on the Earnings Calendar.  Front and center will be the builders with LEN reporting before the bell and KBH after the bell.  Remember the official kick off earnings session is Friday when several of the big banks report.

Action Plan

Yesterday saw yet another round of new record high closes in the DIA, SPY, and QQQ.  The IWM managed to break out, printing a new record high but then slipped back into consolidation.  I doubt anyone is all that surprised that the futures are finally pointing to a lower open this morning.  However, it’s always disappointing when it happens overnight traping retail traders.  Now the question is will it trigger some panic selling or will those tenacious bulls dig in to wait for earnings.

With the rally have been so strongly up you have to look at intra-day charts find price supports.  Keep in mind that potential reversals can create a lot of fast price action.  Violent whipsaws are possible if the emotions of fear or panic begin to well up.  Times like this can be very challenging for new or inexperienced traders so plan accordingly.

Trade Wisely,

Doug

The Bulls Keep Charging

The bulls keep charging upward trampling any bears that happened to step into their path.  I like some everyone else see the indexes as extend and common sense would suggest a rest of pullback should occur soon.  It took me a long time learn that when the bulls are this feisty that try to apply common sense left me standing on the sidelines and missing out on an extraordinary bull run.  I can only assume that money is pouring into funds and 401K plans because of the fear of missing out.  There are now analysis’s which have built a case for Dow 30,000.  If you think that can’t happen, just go back and study the late 90’s tech bull run.

Please understand that I am not predicting that will occur I’m only pointing out it has in the past, and the possibility exists.  Common Sense may not apply.  Stay with the trend but guard against complacency by having a plan to protect profits and capital if the bears return.  Remember reversals can be swift and brutal but a prepared trader and avoid the pitfalls of emotional trading.

On the Calendar

Tuesday’s Economic Calendar begins with a Fed Speaker at 10:00 AM followed directly by the Jolts report.  Consensus for November on job openings is expected to grow to 6.038 million.  With the country at seen at full employment, supports the concern that the lack of qualified workers is now limiting company growth.  After that, we only have a couple of bond auctions to close the economic calendar day.

On the Earnings Calendar, we have 13 companies reporting results.  Notable before the bell is AZZ and SCHN and after the close is WDFC and SNX.

Action Plan

After a slightly weak beginning to the trading day, the bulls once again showed their tenacity by pushing higher.  The DIA closed down a whopping 0.05% while the SPY, QQQ, and IWM pushed upward to set new record closing highs.  Go Bulls!  Currently, the Dow futures are pointing to a slightly higher open this morning.  Oil futures are also pushing higher this morning as winter demand continues to grow with the persistent cold temperatures around the country continue.

I fell like I’m beginning to sound like a broken record, but the bulls are still in control so I will say with the trend.  However, with the market looking as if its extended at least in the short-term we should closely monitor price action and have a plan ready if profit-taking begins.  The bears haven’t eaten in a very long time so given a chance expect them to bite at any time.

Trade Wisely,

Doug