Bearish engulfing price action at resistance.  Bears gain the advantage.

The bearish engulfing candles left behind yesterday on the DIA and SPY put the Bears in temporary control of market direction.  The fact that they took control right a price resistance is also very important as well as concerning.  Clearly daily supports are still in place, but we should expect at a minimum a strong challenge.  There is no need to panic but caution flags and warning lights are flashing.  This bearish attack could be short lived but it could also be the first warning sign that this bull run has come to and end.  The Bulls will certainly fight back but we should never ignore the seriousness of a potential failure at resistance.  Plan accordingly.

On the Calendar

The Economic Calendar starts to heat up today with some important reports through weeks end.  Import and Export Prices kick things off at 8:30 AM Eastern time followed by the Petroleum Status Report at 10:30 AM.  This afternoon at 2 PM the Treasury Budget will be released.  Of these reports, the most likely to move the market is the Oil Status Report.  Also noteworthy are the two mid-day Fed speakers.  The Earnings Calendar has over 350 companies reporting today.

Action Plan

The last couple days I have been warning about the dangers of getting overly long a market that’s struggling to break resistance.  Yesterday afternoon the Bears began to overwhelm the Bulls breaking intraday support levels.  This morning the Bears continue their offensive with futures number suggesting the Dow will gap down about 50 points.

Watch your positions closely this morning and be prepared to take profit or exit trades to stop losses if necessary.  The SPY and the QQQ seem to be less affected, but if the DIA continues to push lower, it certainly has the power to pull the other indexes down.  So at least for this morning, the plan will be account management, possible profit taking, and capital preservation.  Keep in mind that daily supports are still in place, so there is no reason to panic, but we also don’t want to bury our heads in the sand.  Always be prepared to act.

Trade wisely,

Doug

The market is pounding on the price resistance door.  Will it open?

With the DIA and SPY pounding on the price resistance door we are left with a question.  Do the Bull have the energy to push it open?  The QQQ has certainly been doing its part resuming market leadership capturing new highs.  Still, the broad market seems lethargic and uninspired.  Futures are currently pointing to a higher open though not enough just yet to overwhelm the Bears.  Perhaps as the morning rolls along, the huge number of earnings reports will provide the spark necessary to break through.

The longer the Bulls pound against the door unable to open it the Bears will become emboldened.  Keep an eye out for clues of failure if this level of resistance proves too difficult for the Bulls to breach.  As of now, I’m sticking with Team Bulls, but I’m prepared to switch sides quickly if the momentum shifts.

On the Calendar

Another light day on the Economic Calendar has the JOLTS report at 10 AM Eastern and 3 Fed speakers.  To move the market the JOLTS number which tracks monthly job openings would require a huge surprise.  No likely!  Of course, the Fed speakers always have a chance of moving the market if they interject an unexpected comment on rates.  Over 400 companies report earnings today with NVDA being one of the most watched.  NVDA number will not be out until after the bell this afternoon.

Action Plan

After a disappointing start yesterday the Bulls managed to stage a small choppy rally.  The DIA and SPY closed just slightly bullish, the IWM recovered from early lows, but the QQQ stretched out to a new all-time closing high.  Although bullish, both the SPY and the DIA remain under price resistance.  Both need a burst of energy to break through to new highs.  However, this also the area we have to watch for clues of failure if the Bears gain an advantage.

Counting both stock and options positions, I’m currently holding ten open swing trades.  Considering most of the market is still under the influence of resistance It’s about as aggressive as I’m willing to be at the moment.  It might be wise for some to consider taking profits on current positions before entering new trades.

Trade Wisely,

Doug

Friday’s afternoon rally left price action clues of bullishness.

Clues of bullishness were left behind on Friday but let’s not forget resistance may still have something to say.  As much as I would like to see a bullish breakout, I also have to recognize that both the SPY and DIA still have need fight through new high resistance.  It is very importance we put aside the bias of what we want to happen and be willing to see clues of reversal as we test resistance.  Believe me, I want to see the market breakout, but that is a bias that can be very dangerous.  As we test resistance levels, I must remain objective and focused on the price action.  Like it or not, isn’t this exactly where a failure could occur?  Stay sharp, focused and flexible!

On the Calendar

We kick-off the new week with a newly elected French President at the helm.  At least, for now, the market seems to support Macron removing a little uncertainty.  We have 2 Fed speakers before the market opens, but after that, the Economic Calendar has nothing else of note.  On the Earnings Calendar, the market faces another big week of reports.  Today there are more 260 companies reporting so remain vigilant in your preparation for new and existing positions.

Action Plan

I must admit to being a little disappointed seeing the futures point to a lower open this morning.  With the end of the day bullishness on Friday and the French election, not ruffling feathers I was expecting more bullishness.  As normal I looked through a lot of charts this weekend.  Although one can clearly see a tentativeness in the broad market, there are a substantial number of bullish charts with good signals.  If the overall market begins to display a little follow through strength, I will be looking for new positions today.

Anytime we are at or near new highs it’s easy to make the mistake of becoming complacent.  Always keep in mind that a failure at resistance is possible.  It’s very important to remain watchful for clues of reversal when testing new highs.  Head fakes and whipsaw price action are always possible at resistance.  Equally important is avoid predicting and simply follow price action.  Currently, my read of the price action of the overall market as bullish but I know it can pivot in about half a heartbeat.  If we simply follow price rather than thinking, we can predict it; we will naturally be more flexible if a change occurs.

Trade Wisely,

Doug

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 4^th 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