Price Action continues to consolidate in a very tight range.
Overall the price action of the market remains fenced into a very small range. I think most would like to see that north gate open which will put a lot of pressure on the Employment number to perform well. However, the south gate is under pressure from uncertainty as well as falling oil prices. The longer the Bulls and Bears are confined, pressure will continue to increase making a big move possible. One thing is for sure; I will carefully watch both fence lines, prepared to react if one gives way. Now is not a time to be blinded by bias.
On the Calendar
Today we get one the most watched number on the street, the Government Employment Situation Report. The March number was a disappointing 98k but the consensus expectation today is 185k. Although this number seems to be very inconsistent, it remains on the best gauges on the overall health of the economy. After all, if jobs are growing, then business must be growing, and consumers must be happy and confident enough to part with their money. The Employment Situation number comes out at 8:30 AM Eastern so any reaction to the number will be before the open.
Beginning at 11:30 we have a string of Fed speakers including Chairman Yellen at 1:30. If they happen to utter something that the market is not expecting plan on a market reaction. There are just over 100 companies reporting today. I either looked at the Earnings Calendar wrong, or they made some changes because next week is now another big of reports. Ugg!
Action Plan
Yesterday I spoke bullishly about the overall market, but the sell-off in oil left us stuck with more choppy price action. Currently, I am still bullish holding several profitable long positions however if oil continues to slide south it obviously keeps the Bulls penned up. The Employment Situation number could be the deciding factor today. Friday is profit day, and I am planning to put some money in the bank.
Trade wisely,
Doug
Positive price action at support inspires a little bullishness.
Seeing a little positive price action at support encouraged the Bulls to work a tiny bit harder yesterday. As expected there was no interest rate increase, but the odds of a June increase are now better than 90%. However, it’s important to note even with three more 25 basis point increases the prime rate will still be below 2%. The news out of the Washington DC says we can expect a vote on the new health care bill today. It would appear they have finally acquired enough votes to get the job done. I suspect that is one of the reasons we are seeing the futures pushing higher this morning. Today is also the last big day of earnings this quarter with nearly four times more reports than are scheduled for all of next week. If the Friday Employment Situation report is as positive as the ADP suggests, a bullish breakout could be in the cards. Only time will tell. If you happen to be an old Star Wars fan, May the 4th be with you!
On the Calendar
On the Economic Calendar, today is International Trade, Jobless Claims, and Productivity Costs all coming out at 8:30 AM Eastern. At 10 AM we will get the Factory Orders number. As usual the most important of the these will be the International Trade & Jobless Claims, but they would need a surprise to move the market. Please keep in mind that Friday is the big Employment Situation report. Chalked full of reports today is the Economic Calendar with 558 companies revealing quarterly numbers. Today is the last big earnings day this quarter. Yeah!
Action Plan
After giving up ground in the morning, the Bulls dug in and pushed back finally showing some strength. It’s going to be important for the Bull’s to step up again today and follow through with another show of force. Typically the market will be choppy ahead of the Employment Situation Report, but Wednesday’s strong showing of 175K in the ADP could inspire a bit of confidence in the Bulls. Currently, the futures are pointing to a 50 point gap up which is encouraging. I will be looking for new positions today. Keep in mind Congress is expecting to vote on the new health care bill today. If it finally passes, I think the market will view that as a positive.
Trade wisely,
Doug
Choppy price action expected, uncertainty abounds.
Choppy price action is the norm as the market waits for the announcement. Today could be extra challenging due to earnings reports. Apple missed the mark yesterday which could prove difficult for the QQQ to continue it’s leadership higher. Both the DIA and the SPY are in tight consolidation ranges not providing us directional clues just yet. Toss in the FOMC, the Employment Situation Report on Friday along with a slew of earnings, uncertainty abounds. As always try to avoid all the noise and emotion by staying focused on the price action.
On the Calendar
Today on the Economic Calendar we have a couple of potential stumbling blocks. The first being the Petroleum Status Report which had shown a small improvement in supplies. However, there was a recent story about the US, and I think Lydia have ramped up production which tosses the Status number into question. Then, of course, have the FOMC Announcement at 2:00 PM Eastern. I think it’s very doubtful the Fed will raise rates today if they reference more hike in the near future the market will react. The ADP Employment is at 8:15 AM and ISM Non-MFG index come out at 10 AM.
On the earnings calendar, we continue to ramp up with more than 400 companies reporting today. Please continue to look before leaping into a trade just before and earnings report. Use TWLO as an example of how being uninformed can cost you a bundle!
Action Plan
FOMC days tend to be very challenging days to trade. As a general rule, the price action is slow and choppy until the announcement, and then volatility goes wild with big up and down swings in just a few minutes. Once the initial reaction subsides, Yellen gives a press conference stirring the pot again. I would encourage new or struggling traders to stand aside avoiding the additional risk.
Another complication today is that APPL missed earnings yesterday afternoon. The selling was not extreme in the post-market, but the influence of APPL can move markets if selling pick up today. Currently, the futures are pointing to a modestly lower open. I want to take an extra dose of caution this morning. Perhaps the market can shake off the poor reports, but I don’t want to risk more capital until I see that in the price action. I’m expecting choppy action until the FOMC announcement, so there is no need to rush new entry decisions.
Trade wisely.
Doug
Not every day is a good trading day!
The words of my old mentor, Not everyday is a good trading day, ring in my ears this morning. If fact, she used to say that there were only about ten days a month good for entering trades. Personally, I’m not that stringent, but her point still rings true today. Often as traders, we feel rushed or under pressure to make trades each and every day. After all, we’re sitting here, and it is the only way we can make money!
You have heard me say may times that often less is more. Trading for the sake of keeping busy is a dangerous habit many traders fall into, but only find large losses at the end of that path. Quality over quantity should be our focus. Today we could easily see a lot of choppy price action as the market waits for the FOMC announcement and the highly anticipated earnings from Apple. I for one to wait for quality trades and day like today might not be the best day for entry. Be careful, and make the trades come to you. There is no need to rush!
On the Calendar
Today is a light day on the Economic Calendar with only the Motor Vehicle Sales numbers. Although an important number that confirms consumer sentiment it is unlikely to move the market. Of course, the beginning of the FOMC meeting is noteworthily, but it’s only the announcement on Wednesday that matters. On the Economic Calendar, we have 257 companies reporting today however only one company receives most of the attention. Apple earnings are always highly anticipated, and thus a potentially market moving event.
Action Plan
I’m expecting choppy range bound price action today as we wait for the FOMC announcement. However, with so many companies reporting, I want to stay on my toes and focus price action clues. Although a big market move is unlikely today, I don’t to rule out possible setups. There should be no reason to feel rushed this morning. I as always will be very picky; I don’t need to trade every day to be successful. Not every day is a good trading day! Futures are currently suggesting a slightly lower open but as earnings continue to roll out that could easily change.
Trade wisely,
Doug
Earnings could push us to new market highs But, will the weekend effect get in the way?
There is no question that the earnings from AMZN and GOOG will inspire the Bulls. It is possible we could see all time now highs in the markets today. However, with tensions rising in North Korea and Congress still dragging their feet on a budget extension could derail that plan. I think we have to approach today with the idea that anything is possible.
If the Congress would get out of the way and do their job, I think the market would be free to rally. Congressional tradition suggests they will play games all day letting the markets close in limbo. Then to prove to us just how hard they work they will work late into the night. That tosses huge questions on how Monday morning will be affected forcing the Bulls to keep their hand in their pockets today.
If by some miracle Congress does get something done before the market close we could see some wild price action after the news. Trying to predict what will happen is a fool’s errand, so the best we can do is focus on the price action and make wise business decisions with the information at hand.
On the Calendar
We kick off Friday with a reading of the GDP number at 8:30 AM Eastern. The GDP is a market moving number. Also at 8:30 we get the Employment Cost Index followed by the Chicago PMI at 9:45 and the Consumer Sentiment at 10:00. Clearly, these are all important numbers, but unless there issue a big surprise, it’s unlikely they will have much of an effect. On the Earnings Calendar, we have 97 companies reporting today.
Action Plan
Friday is normally a profit taking day for me but today may be a little different. All the earnings after the close yesterday have the potential of creating some pretty good buy signals today. I want to be careful not to overload ahead of the weekend and may consider smaller than normal positions. We have to keep in mind that tensions are growing concerning North Korea. Anything is possible so keep that in mind as you prepare for the weekend.
Trade Wisely,
Doug
Mixed price action signals and emotion cloud the view forward.
Mixed price action signals coupled with the drama of a huge earnings day could make for a bumpy day. Over the last few days, the Bulls have made a strong statement smashing through downtrends and resistance levels. As a result, most traders have an upside bias. However, the shooting star candle pattern that appeared yesterday on the DIA and SPY raises the flag up uncertainty.
Today we have a huge number of companies reporting earnings. The question will there be enough positive reports to support current price levels. There are currently more companies with prices above $100 a share than ever before. As long as companies continue to perform that is not a problem but if too many show signs of stress at this altitude there could be trouble ahead.
The last thing I want to do is predict which side will prevail, Bulls or Bears. I want to avoid all the noise stay focused on the price action making the trades come to me. Flexibility and the willingness move with the market no matter the direction is critical. The price action of the market is always talking to us and leaving behind clues. The question is are you listening to and willing to see the clues or has your bias plugged your ears and fogged your vision.
On the Calendar
Today on the Economic Calendar we have three potential market moving reports at 8:30 AM eastern. The Durable Goods and International Trade numbers being most important with Weekly Jobless Claims to follow. Overshadowing the economic numbers today will be our first big day of earnings reports this season. With 477 companies reporting, plan for an extra dose of volatility today. Also, we must remember that Congress is moving forward on the new health care bill. Any news surrounding this controversial subject has potential market moving effects, plan accordingly.
Action Plan
My plan today calls for flexibility and a keen focus on price action. With the barrage of earnings announcements and news spun from DC anything is possible. With the DIA, SPY, and IWM tucked tightly against important resistance levels fast and extreme price moves are not out of the question. As a result, I don’t approach the market today with a bullish or bearish bias. I want to be prepared to react to price action clues without the fog of bias clouding my focus.
Trade wisely,
Doug
Trading discipline. Now begins the high drama of earnings season.
Controlling emotions and maintaining a trading discipline during earnings season challenges all traders. Over the next couple weeks prepare of an earnings barrage. CNBC will be pulling out it’s most dramatic bumper music, and the talking heads will be issuing predictions left and right. How can an average retail trader cope with this tsunami of data?
Have a plan and be disciplined enough to stick to the rules. Personally, I turn off the news and avoid the talking heads like the plague. I am responsible for my trading. No one cares about my money more than me. Consequently, I must stay focused on my plan and my rules! For me, that means digging into the charts and studying price action. Chasing big wins requires the willingness to take big losses if you’re wrong. I don’t know about you, but that is not part of my plan! The truth lies in the price action; everything else is just noise that can bias your decision process.
On the Calendar
The hump day Economic Calendar is a quiet one. The Petroleum Status at 10:30 AM Eastern is the only number of consequence today. The last reading showed a decline in supplies and as a result helped the overall market by lifting some of the big oil companies. Another declining report today could give us a little hope that a trend is developing. Perhaps, we could look to energy stocks for some tasty gains in the near future! The Earnings Calendar continues to Ramp with 299 companies reporting today. Stay sharp because some the media darlings will start reporting and they will affect the overall market.
Action Plan
I have been a net seller into this sharp rally taking some very nice gains. I’m now very light on risk in my account as I’m expecting the market to pullback or at a minimum consolidate the recent move. At least that is my plan, but earnings could easily toss a big monkey wrench into that plan. Clearly, earnings are unpredictable. As traders, the best we can do is stay focused on price action clues while maintaining our discipline to avoid getting caught up in the drama. I’m confident we will be entering several new stock or options positions over the next few days. Please keep in mind that during earnings season trades can move very fast. Stick to your low-risk entry rules and avoid chasing.
Trade Wisely,
Doug
Beware the Green Eyed Monster!
The Green Eyed Monster of Envy can destroy your trading! Last night I was talking with a fellow trader that was very disappointed with their trading. As we progressed through the conversation, it became clear that his disappointment and frustration was self-inflicted. Although he had turned the corner from a consistently losing trader to a net winning trader, it was not enough. Like all of us, he wanted more.
As a very competitive person he was comparing himself to other traders and the results they were posting. Envy was destroying his success! He was ready to quit trading because of the frustration even through his account was growing. Although we all work to help each other improve as traders in the trading room, trading is a single person activity. We all start from a different place, and we all have different goals. Comparing yourself to another trader is like comparing apples and oranges.
A trader must compete with themselves not others. Your goal should be to see improvement in yourself and your trading account. A good place to start is by setting small achievable goals for each week or each month. Record your results. If you only made $10 last month that is a Huge Improvement if you have been a losing trader! If in the next month you see a gain of $15 that’s a 50% improvement over the prior month. Small incremental improvements build confidence and over time builds big accounts.
On the Calendar
Today on the Economic Calendar we have the Case-Shiller numbers at 9:00 AM Eastern followed by New Home Sales and Consumer Confidence at 10:00. Although they are all important, the big number of the day is the New Home Sales and the one most likely to move the market. Earnings are starting to ramp up with 190 companies reporting today. Keep checking!
Action Plan
Futures remained positive all night and continued to push higher in the premarket as earnings roll out. How great it will be to have a follow through day after all the choppiness of the last couple months! I will be looking for new trades today. However, I will be watchful for signs of a pullback to test support because it could happen at any time. Yesterday was saw the Dow close up more than 200 points. It would not be out of the question to see some profit taking.
Trade Wisely,
Doug
The futures price action suggests the Bulls are back in town!
The pre-market futures price action seems to indicate that the Bulls got everything they wanted over the weekend. The establishment candidates win in Europe removing much of the uncertainty of their path forward. Also, our President has put a very ambitious plan for Congress this week. Not only is he expecting the passage of the New Health Care plan but also his new Tax Plan as well as a budget extension.
The Bulls seem to like everything they hear and apparently want to party like it’s it 1999. As I write this, the Dow Futures are pointing to a nearly 200-point gap up. It would be easy to let our emotions run wild this morning but let’s not forget that Congress must get something done! Passing just one of these important measures would be a big week for this Congress let alone three! If they fail should we expect a similar Bearish response in the market?
As much as I love seeing resistance levels broken, I have to remember that a one day gap up move does not make a trend. A pullback to test support is not only possible but likely. It would not be out of the question to see a big intraday whipsaw to test support with emotions running this high. Keep a very close eye on price action this morning for quick reversals. The wise trader will maintain discipline and stick to their rules of engagement no matter how emotional the market may be.
On the Calendar
The Economic Calander starts with week with a whimper but will end with a roar. Today we have no major reports just a couple Fed speakers pontificating on interest rates. However, as we move the week progresses we have several market-moving stories with the GDP number front and center Friday morning. The Earnings Calendar kicks into high gear this week with nearly 1200 companies reporting by Friday. Today more than 100 report earnings, so it’s a good idea to check and recheck before entering new trades.
Action Plan
At 8:00 AM Central Time I am being interviewed on a local radio station. I should be finished up by the time the market opens today, but I will likely miss the first 30 minutes of the day. I’m not holding many positions and stops are in place, so nothing to worry about there. Just as soon as I get back, I will dive into the charts to see what I can find.
Keep in mind; we could experience a lot of volatility this morning. Sitting on your hands for the first 30 minutes to allow the wild price fluctuations subside would likely be a wise move today. Eventually, the Market could wake up to the fact that Congress saying they will do something is a long way from them getting it done! If they fail, I think we could see Bears regain control. Buckle up it could be a rough week!
Trade Wisely,
Doug
Yesterday’s price action was great but can it follow through?
Thursday’s price action was just enough to inspire a hopeful vision of bullishness. As nice as it was to get some relief from the selloff yesterday, more is needed to prove that its over. One of the first lessons to be learned in trading is that one day of bullish price action does not make a trend. Follow through is required.
A single day of price action can suggest reversal; it can inspire bullishness but it truth without following though it’s only hopeful speculation. Let’s keep in mind that the DIA and the SPY rallied to test resistance but failed to break it. On the other hand, the Q’s and the IWM found the energy to break resistance. Now the question is, can it hold?
Personally, I hope that it can, but I’m unwilling to speculate and risk my capital until I see a bit more proof. I have a rule that resistance does not become support until its tested. Over the year that rule has saved me from taking significant losses Hoping that support will hold. Hoping that something is true is natural but risking capital on Hope is nothing more than gambling. Las Vegas has build monuments with the lost capital of hopefulness. I understand that waiting is hard, but it’s my opinion that waiting is much easier than the pain of loss.
On the Calendar
We kick off the Economic Calendar today with a Fed speaker at 9:30 AM Eastern time. The PMI Composite number quickly follow at 9:45 AM with Existing Home Sales at 10:00. Both reports have the potential to move the market. It would be wise to keep an eye on price action after these reports with the market as such a critical point. On the Earnings Calendar, we have 36 companies reporting today but keep in mind there are 110 reporting Monday. Plan accordingly and be prepared. Not checking is lazy and we all know there is no room for lazy when our money is at stake!
Action Plan
As you know, I consider Friday as Pay Day! As a result, my focus shifts from buying to new positions to taking profits. With all the uncertainty we are currently experiencing in the world right now I feel much more comfortable reducing risk before the weekend. One of the hardest lessons I have ever learned is never to allow greed to get in the way of taking a profit. We all want to hold our for higher gains, but experience has taught me that very often less is more. Commissions are cheap. I can always buy a position back on Monday, but I can not guarantee there will be a profit unless I put it in the bank!
Trade Wisely,
Doug
Overall the price action of the market remains fenced into a very small range. I think most would like to see that north gate open which will put a lot of pressure on the Employment number to perform well. However, the south gate is under pressure from uncertainty as well as falling oil prices. The longer the Bulls and Bears are confined, pressure will continue to increase making a big move possible. One thing is for sure; I will carefully watch both fence lines, prepared to react if one gives way. Now is not a time to be blinded by bias.
