Good morning everyone
The good news is we no longer have to worry whether or not the support will be tested. That has clearly been answered and we have to move on the next question. Will support hold? I suspect with some of the big banks reporting on Friday and early next week that hope of positive numbers will prevent the big guys from getting full-on bearish just yet. That, however, doesn’t mean that we could see a quick move below support simply to sweep out stops so don’t rush in if we see a little bullish push right at the open.
If you are a long-only trader let me suggest taking the rest of the week off. Wait to see if earnings can, in fact, break the downtrend. Until that occurs the bears are in control and they love to steal the lunch money of traders high on hopium predicting a bottom has been made. You risk almost nothing by waiting for proof except maybe bragging rights if you do happen to get lucky and pick the bottom. If you are that kind of trader it’s better to go to Vegas because there will at least bring you free drinks to dull the pain of watching your money disappear. That may sound a bit harsh but it’s the truth. You can thank me later.
Trade Wisely,
Doug
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Good morning everyone
First I would like to say thank you to everyone for all the kind words, prayers and well wishes that I have received on the passing of my father-in-law. The members of this room are the best and over and over proves itself as more than a trading room but an extending family. My wife Connie and I are very thankful to be a part.
Today we had a couple fed members speaking and at 2 PM eastern we will get the minutes of their last meeting. It’s possible we could see volumes diminish after the morning rush while we wait. Personally, I would be surprised if we find out anything we don’t already know but anything is possible.
Yesterday turned in a bearish evening star pattern right at the 50 SMA on both the DIA and the SPY. Lately, we have seen big moves down rejected by big reversals the following morning. Unfortunately, we are not seeing that this morning as the futures remains flat to slightly bearish. To me, this would suggest more downside moves are likely within the next couple days. The big question if that occurs will be if the price support is strong enough to hold. I think we will soon find out.
With several of the big banks reporting Friday morning, a reversal, if there is one, would logically come at that time. That being said, we also have to acknowledge that logic is not one of the markets strong points.
Trade Wisely,
Doug
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Good morning everyone. Today is the official kick-off to earnings session with AA reporting before the bell today. I urge everyone to take the time to check when a company reports before adding new positions as well as those you are currently holding. The last thing you want is to be reminded of an earnings report with a big gap down in price on stocks you own.
Yesterday the market left us shooting star candle pattern at the 50 SMA on the DIA. Not exactly inspiring confidence…however, it’s all about the follow through. A shooting star pattern on its own means nothing unless there is a follow through with a bearish candle printed today.
Futures were bearish most of the night with Asian markets closing mixed but the Euro markets continue to remain in the green so far this morning. My suggesting is to move slowly this morning, Let,s give the market 20 to 30 minutes to process before adding new positions.
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Good morning everyone.
Today is Columbus Day and which means banking, government agencies and most of the big financial centers will be closed today. What does that mean? After the morning pop, I expect the market to get very choppy and volumes to drop off quickly. As of now, the futures seem happy suggesting a gap up of about 60 points. At first glance, that seems exciting but then we remember all that really does is recover the losses from Friday and really doesn’t change anything.
We must see a close above resistance and then it must prove it can hold it as support before there is any reason to get very excited. It would be wise to keep that in mind if or when you are considering new positions. If you think about it a light volume day would be the perfect time to set up a head-fake breakout only have it reversed when everyone comes back to work on Tuesday.
Although I’m very happy to see some bullishness today trusting that it’s real after more than a month of big chopping price action is another story.
Trade Wisely,
Doug
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Good morning everyone. It’s Friday! Today we finally get the employment situation number and will any luck we will see the market pick a direction and finally break out of this chop. After the number is released we will likely see some very wild trading in the futures that could flip directions several times before settling down. I’m expecting a gap open that could be pretty big so I will just sit quietly and watch the amateurs duke it out for awhile before making any big decisions on positions.
In my option, the worst thing that could happen today would be having the market remain stuck and we would have to look forward to yet another week of small range chop. Keep in mind there are 4 Fed members speaking today so if the number is a surprise in either direction plan on them chiming on interest rate talk.
Keep in mind that Monday is Columbus Day and although the markets will be open banks and other institutions will be closed. Volumes could be very light as a result and it might be a good day to jut go fishin’. Have a fantastic weekend my friends.
Trade Wisely,
Doug
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Good morning everyone. I hate to say it but today I am expecting a whole lot of nothing. After the morning rush, I fully expect the market to settle into a very small range chop as it waits for the Employment Situation number Friday morning.
Sadly there is not much we can do to trade the Friday number because it will happen pre-market and the big action will likely occur before the open. I personally see the potential for a big gap in either direction tomorrow that we will obviously not be able to control. Thus, my suggestion is to manage the trades that you are in and avoid putting on additional risks. If fact if you are concerned there is nothing wrong with taking gains on trades that currently have profits and then just sit back and watch with your capital protected.
Trade Wisely,
Doug
Click Here to Watch the Morning Video
Good morning everyone. Today we have several economic reports starting with the ADP jobs number and ending the Oil status report and several other in-between. Personally, I think the Oil report has the best chance of moving the market but any surprise on jobs could also get us moving. The question is which direction.
Without question, the market is a mess. For an entire month, the DIA has chopped between a range of less than 3 points with a different direction almost every day. Now we are even seeing intra-day whipsaws between the upper and lower ranges.
Chop like this dangerous and unproductive. A wise trader is mostly sitting on the sidelines just waiting for a direction to be decided on. Trading this mess is akin to playing in a meat grinder. Just say no to chop!
Expect the market to really get slow and choppy after the morning rush of reacting to the news as we then go into a waiting pattern for the Friday Jobs number. Anything is possible.
Trade Wisely,
Doug
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Good morning everyone. The overall market continues to tighten its price range and seems to be locked into a choppy go nowhere pattern. We don’t have any economic news to speak of today that could provide a spark of directional energy but we do have 2 Fed speakers wasting oxygen.
We are beginning to see a barrage of talking heads predicting the market has nothing up upside with an equal number of those saying we are close to a cliff. The fact of the matter is these talking heads are on their knees pleading a case to please put your money in the market because they are bleeding to death this year. A report last night showed that only 16% of money makers are beating the market so far this year. Outflows from mutual funds continue to grow and even hedge funds are parking money in ETF’s just hoping to at least match the market.
Trust me on this the market will eventually pick a direction and it will have nothing to do with any of these talking heads and their predictions. Just follow the charts, my friends.
As this range continues to tighten the danger of a big move grows. The very best position today is to keep your hands in your pockets and away from your keyboard. Wait, watch and be ready when a direction shows itself.
Trade Wisely,
Doug
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Good morning everyone and Happy Monday! As you make preparations for the trading day keep in mind that even though Friday was a very nice rally off of the lows, nothing really changed. We are still trapped between 2 levels and the swift reversals we have seen lately could change everything in about half a heartbeat.
We have several data points that could move the market this morning but I think the one that will receive the most attention is the ISM number. Last month ISM was a surprise showing a contraction in manufacturing. Expectations for this month is a reading a 50.3 which is a weak number but that would at least be on the side of expansion. Another reading below 50 will likely bring out the bears so watch the price action at 10AM eastern. In fact would be a very good idea to wait on starting any new positions until we see the reaction to the ISM.
Friday is Big Kahuna with the monthly reading on employment when the Employment situation number is released. We can expect the market to do a lot of choppy waiting around for that number as we approach mid=week.
Also keep in mind we have begun the last quarter of the year. That means earnings will begin soon and the tension over the presidential election will continue to grow. October could prove to be a volatile and challenging month.
Trade Wisely,
Doug
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Good morning everyone. It’s Friday! Yesterday was one of those ugly whipsaw days starting out good and making us think we might actually get 3 days in a row in one direction but that dream was crushed as the market took back all of the last 2 days positive move.
Today we have a lot of potential market moving data so let’s all hope its positive enough to offset the bearishness created with the DB issues in Europe.
Keep an eye out for possible trades today. Have a great weekend.
Trade Wisely,
Doug
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