Bulls undoubtedly in charge.

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Bulls undoubtedly in charge

The bulls are undoubtedly in charge, or could this be irrational exuberance as the DIA and IWM leap to new record highs and states impose economic restrictions on the holidays just around the corner.  One thing for sure, there seems to be no shortage of traders willing to chase prices higher with little regard to risk.  The T2122 indicator indicates an extreme short-term overbought condition, so stay focused on price action for any signs of a pullback.  Also, keep in the possibility of overnight reversals as you plan your risk and avoid chasing stocks already extended with the fear of missing out.

Asian markets were sharply higher overnight in reaction to signing a massive trade deal with 14 Asian countries.  European markets are decidedly bullish this morning as vaccine hopes continue to inspire hopes of recovery.  U. S. futures continue to leap higher as the DIA and IWM look to open at new record highs while infection rates and hospitalizations notch new records as well.

Economic Calendar

Earnings Calendar

We have a rather large week of earnings kicking it off with more than 70 companies fessing up to results this Monday.  Notable reports include JD, ACM, FUV, BIDU, CSPR, GAN, KRUS, PANW, SDC, SOHU, & TSN.

News & Technicals’

China and 14 other Asian-Pacific countries signed the world’s largest trade agreement over the weekend.  According to analysts, economic benefits are modest and would take years to materialize.  Texas and Washington set new Covid records this weekend as Midwest states as the Dakota’s and Nebraska set the largest daily increases per capita.  As states across the country implement restrictions with severe potential economic impacts, the market continues to surge focused on the hopeful vaccines.  Though some point to a possible bubble forming, it has done nothing to dissuade traders from buying up stocks even as P/E ratio’s swell and prices leap toward new record highs.  How much longer that can continue is anyone’s guess but, it would be wise for traders to be mindful of the substantial risks with just a pullback to support. 

Technically speaking, the indexes appear very extended, and the T2122 indicator is registering an extreme short-term overbought condition even as the futures point to another gap higher this morning.  The DIA and IWM will break out to new record highs at the open today, with the SPY not far behind, assuming the futures hold on to the overnight bullishness.  Plan your risk carefully as price volatility remains high in this wildly energetic and emotionally charged news-driven environment.

Trade Wisely,

Doug

Pandemic numbers rise

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Pandemic numbers

The bears came out to play yesterday, but fear seemed to remain in check as the selling appeared to be measured and controlled.  It is very surprising with pandemic numbers on the rise and hospitalizations beginning to strain the country’s healthcare system.  Jerome Powell once again called for more stimulus to combat the economic impacts, but Mitch McConnell stated and unwillingness to negotiate and larger spending plan.  That said, the tenacious bulls are fighting back this morning with the futures pointing to a gap up open.

Asian markets closed the day seeing read across the board in reaction to rising infection rates.  European markets opened the day lower but have rallied, holding very modest gains at the time of this report.  However, here in the U.S, futures point to a 200 point Dow gap up ahead of a lighter earrings day and the pending PPI Report.  The question is, will we see follow-through buyers at the open, or might this setup a pop and drop pattern heading into the uncertainty of the weekend?

Economic Calendar

Earnings Calendar

On the Friday earnings calendar, we have a lighter day of reports dominated by small-cap companies.  Notable reports include DKNG, MANU, SPB, & VIPS.

News & Technicals’

The pandemic numbers brought out the bears yesterday, but the selling appeared controlled, with the VIX rising only slightly.  Chicago issued a stay at home order begins on Monday except for essential needs.  Mitch McConnell added pressure to the market, saying he had no interest in negotiating a larger stimulus plan.  That comment came on the heals of Jerome Powell’s speech, where he said more stimulus is needed to battle the impacts of the rising pandemic numbers.  The U.S. set another new record as infection numbers jumped to over 150,000, with hospitalizations up by at least 5% in 47 states.  Treasury yields slumped yesterday in reaction to the rising numbers, with gold and silver rebounding slightly as a result. 

After reading the paragraph above, one would expect the market would be following through with the selling that began yesterday but no, the relentless bulls are fighting back this morning.  Perhaps traders are responding to the positive earnings after the bell yesterday, where DIS, AMAT, and CSCO rallied after better than expected results.  This morning’s question yet to be answered, will the gap find buyers after the open, or will we see a pop and drop heading into the uncertainty of the weekend?  Remain focused and flexible, weighing the risk you carry into the weekend carefully.

Trade Wisely,

Doug

A big day of data.

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data

Though considerably overextended in the short-term, the vaccine news and hopes of recovery continued to encourage the bulls as the tech sector bounced off support.  Sadly, news of 144,000 new infections and possible business restrictions or lockdowns weigh heavy on this morning market. Facing a big day of data, the gap down in the Dow will challenge the support of Monday’s massive rally.  Buckle up for another day of new-driven volatility.

Asian markets closed mixed but mostly lower in a relatively muted day of trading.  European markets have a bearish attitude this morning, with the DAX and CAC trading more than 1% lower at the time of this report.  As we wait on Jobless Claims, GDP, a Powell speech, and a big round of earnings reports, futures currently point to bearish open.  Of course, the news events could quickly improve or worsen the current sentiment.  Stay focused.

Economic Calendar

Earnings Calendar

We have our most important day of earnings this week, with more than 150 companies fessing up to quarterly results.  Notable reports include DIS, AQN, AMAT, BZH, CSCO, DGLY, DLB, ENR, FTCH, GLOB, DGRX, HIMX, JAMF, MFG, PLTR, PDD, SBH, TK, TDG, U, & WIX.

News & Technicals’

A tech bounce led the market yesterday, with the SPY and IWM struggling to find direction, while the DIA ran into a little profit-taking.  As the Presidential election saga drags on, the U.S. experienced another new record in COVID infections topping 144,000.  That is the 9th straight day of more than 100k new infections, Ugg.  Yew York has imposed a curfew on restaurants, bars, gyms and limited home gatherings to ten.  The Biden Covid advisor is suggesting a lockdown of 4 to 6 weeks to control the surging pandemic.  It looks like we’re in for a long winter and a tough holiday season.  President Trump continues to allege fraudulent election activity, filing multiple lawsuits and appeals even as Biden moves forward with the transition appointing his close friend as Chief of Staff.  The Republican state AG says it’s highly unlikely that Trump will win in Arizona, citing no fraud evidence.  Georgia will do a hand recount of election ballots, but the Biden lead continues to grow, according to reports. 

Though the T2122 indicator continues to warn of an overbought condition, the tenacious bulls hold firm fending off any attempt by the bears.  Unfortunately, worry over pandemic numbers, and the threat of more lockdowns have the futures pointing to a gap down open this morning will test the support of Monday’s massive rally.  With a big day of earnings and economic reports, price volatility could be high, and news-driven whipsaws and reversals are possible.  Stay focused, and flexible.

Trade Wisley,

Doug

Rotation

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Rotation

A rotation out of the high-flying tech sector into value and dividend-paying stocks seems to underway as we wait for the courts to weigh in the election.  The pandemic numbers once again surged to new record hospitalizations and infection rates, raising concerns about possible negative economic impacts.  With the indexes so extended from critical averages,  traders have to take a considerable risk when entering new positions.  Plan your risk carefully in be careful chasing with the fear of missing out.

Asian markets closed mixed but mostly lower, and concerns over new regulations push tech shares down 10%.   European markets are edging higher again today, riding the wave of vaccine-related recovery hope.  U.S. future point higher with yet another Dow gap even as pandemic numbers surge.

Economic Calendar

Earnings Calendar

We have just over 50 companies stepping up to report quarterly results on this hump day.  Notable reports include APD, ATO, FOSL, LMND, REYN, SB, SPTN, SLGG, TTEK, VRM, & YPF.

News & Technicals’

Another day and more new records set on the pandemic, with national hospitalizations topping more than 61,000 and over 131,000 new infections.  However, market futures continue to rise even as new rolls out of new city lockdowns going into place.  The Supreme Court asked to weigh in on Obamacare yesterday and, according to reports, appears willing to leave the act in place.  A decision from the high court is not scheduled until June of 2021.  Although the election has yet to be certified, Joe Biden is calling for an expansion of Obamacare. Alibaba’s Singles Day event shattered records with sales topping $56 billion, but tech shares in China plunged 10% as new regulatory concerns mount.  Here in the U.S., the tech sector is also showing some weakness as investors seem to be rotating toward value plays and dividend-paying stocks.  Perhaps concerns over potential Covid impacts have traders seeking safety due to the likely difficult winter ahead.

Technically speaking, the DIA, SPY, and IWM remain quite extended from their 50-day averages.  The fear of missing out is driving traders to take a considerable risk as they rush to buy stocks so far from key support levels.  They may be right to do so, but this is not for the faint of heart.  With such a new-driven market, the possibility of a sharp pullback remains high, or we could see a very choppy consolidation while we wait for the key averages to catch up.  It’s easy to overtrade in this kind of environment, so make sure you follow your rules and carefully understand each position’s risk.  The T2122 indicator remains in a short-term overbought condition, and the VIX above 24 handles as the indexes reach out to new records is extremely abnormal when compared to historical price action. 

Trade Wisely,

Doug

Historic Market Gap

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A historic market gap on a piece of hopeful vaccine news making new record highs in the DIA and SPY as recovery sentiment surged.  Unfortunately, after the pop, profit-takers left behind a negative candle pattern raising the possibility of price pulling back to fill the massive gap.  Big tech seemed to struggle while small-caps enjoyed a solid performance as traders looked for value and small businesses to begin recovering.  With a very news-driven market and massive price fluctuations possible in the next story, plan your risk very carefully.

Asian markets traded mixed but mostly higher overnight, led by Hong Kong that surged more than 1%.  European markets trade green across the board this morning in a choppy session as they grapple with the contradictions of shutdowns and hopeful virus news.  U.S. futures have recovered from overnight lows; however, they still suggest a mixed open ahead of earnings and a very light economic calendar.

Economic Calendar

Earnings Calendar

We have more than 70 companies reporting 4th quarter results today.  Notable reports include AAP, DOX, BRKS, DHI, DDOG, FUBO, LYFT, RXT, RKT,& ROK.

News & Technicals’

As virus numbers continue to rise across the country, there have been several stories about hopeful vaccines providing market confidence.  Joe Biden talks about the possibility of a mandatory national mask policy to combat the virus should he be certified as the President-elect.  However, President Trump refuses to concede, and the attorney general has started election investigations, which prevents funds from being made available for a transition team.  The so-called Obamacare act faces a Supreme Court challenge today, but a decision is not expected until June.  The EU launched antitrust charges against Amazon, suggesting they are distorting competition with online retail markets.  AMZN shares are suggesting more than 2% lower this morning. 

A day after a historic market gap, futures trade mixed but well off of overnight lows.  The big pop and drop price action left behind some negative candle patterns, but they held above price support levels by the end of the day.  The QQQ had the weakest performance, with many tech giants struggling to find buyers while the small-cap stocks in the IWM gained favor as vaccine hopes drove recovery sentiment.  Oil prices surged about 8%, and the financial sector recovered substantially yesterday while stay at home stocks saw strong bearish attacks.  The risk remains high in this very news-driven market, so plan your plan carefully because the next big gap or full reversal could be just one story away.

Trade Wisely,

Doug

Infection Rate Surging

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As we wait on an election decision, the pandemic infection rate surged over 120,000 new cases on Thursday.  One has to wonder, with job growth beginning to slow and more than 21 million Americans still requiring unemployment assistance, can this massive rally be sustained? That’s something to ponder as we head into the weekend, and you plan risk forward.  With the Dow having gained more than 2200 points since last Friday’s low, a little profit-taking would not be out of the question.

Asian markets closed the week mixed but mostly higher.  European markets are trading lower this morning as they continue to monitor the U.S. election uncertainty.  U.S futures currently point to lower open, but as earnings results roll in and the Employment Situation number in focus, anything is possible as we slide toward the weekend.

Economic Calendar

Earnings Calendar

On this Friday, we have more than 100 companies stepping up to report.  Notable reports include LNG, COTY, CVS, ENS, HSY, HMC, MAR, MYL, TU, TM & VIAC.

News & Technicals’

As counting votes continues to drag, and all the lawyers involved, it feels like we’re waiting on the judge decide who gets custody of us in the divorce.  While our focus remains on the election results, the pandemic continues to spread rapidly, with more than 120,000 new cases reported yesterday.  Even without government-mandated shutdowns, the concern is growing that business impacts could be severe throughout the winter months.  Numbers show that job growth is slowing and more than 21 million Americans still requiring unemployment assistance.  According to Moody’s report, the U.S.  economy is at a high risk of backtracking due to the surge in pandemic numbers.  Whoever wins the election will face the formidable challenge of avoiding a double-dip recession. 

After rising more than 2200 points from last Friday’s low, the bulls recovered and held the 50-day average, vastly improving the technical picture of all the index charts.  That said, the T2122 indicator shows an extreme short-term overbought condition making new long positions very high risk should profit-takers step in to capture gains ahead of the weekend.  Currently, futures markets point to a lower open, but as earrings roll in and markets wait on the Employment Situation number, anything is possible.

Trade Wisely,

Doug

Extraordinary Bullishness

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Extraordinary

Extraordinary bullishness pushed indexes above their respective 50-day averages yesterday, vastly improving the index charts’ technical picture.  However, the extreme price move comes with the significant risk of a dramatic pullback as the pandemic infection rates surge to a new daily record, and hospitalizations reach critical levels in several states.  As Italy enters a shutdown, the ECB announced another 150 billion in bond buying, helping boost market around the world this morning.

Asian markets surged overnight following the massive Wall Street rally on Wednesday.  European markets are green across the board despite the rising economics of more lockdowns going into effect.  The U.S. futures are once again flying high this morning ahead of a massive day of earnings reports and an FOMC rate decision at 2 PM Eastern.

Economic Calendar

Earnings Calendar

We have a massive day of earnings reports today, with more than 300 companies confessing quarterly results.  Notable reports include DDD, ADT, ALRM, BABA, AMCR, ABC, AINV, MT, ARNC, AZN, BGS, BLL, GOLD, BDX, BKNG, BMY, CZR, CNQ, CAH, CI, CNK, ED, CLR, CUBE, DISCA, D, DBX, DUK, EA, FLO, GM, GLUU, GPRO, GRPN, HLF, HFC, TWNK, HUBS, IAC, IRM, TREE, LSI, LIN, LYV, MAC, MAIN, MLCO, MCHP, MNST, MUR, NYT, NWSA, NLSN, NLOK, PZZA, PK, PTON, PLNT, PBPB, PLL, RMAX, RRGB, RDFN, REG, REGN, ROKU, SRE, SQ, STAG, STMP, STOR, SWTH, TMUS, TTWO, SKT, TRIP, UBER, VER, YELP, YETI, ZG, & ZTS.

News & Technicals’

As they continue to count votes is looking more and more like a Biden win is on the way.  Still, some are saying we won’t have a definitive decision with multiple legal challenges until late November or early December.  However, it looks as if whoever becomes President, the results in the Senate and House point toward gridlock, which the market appears to like gaging by its wildly bullish response yesterday. While everyone focused on election results, the pandemic infection rates soared to a new daily record of more than 100,000.  Hospitalizations also surged at an alarming rate, reaching record levels in Missouri, Oklahoma, Iowa, Indiana, Nebraska, North Dakota, and New Mexico.  Iowa and Missouri warned the hospital bed capacity could soon become overwhelmed.  Senate Leader Mitch McConnell is now suggesting an urgency to come to a stimulus agreement by the end of the year, boosting futures markets.  Also helping to boost market sentiment this morning, the ECB injected another 150 billion in bond buying as Italy enters lockdown.

Yesterday’s market surge was extraordinary as the bulls gapped the four major indexes above their respective 50-day morning averages.  In a late-day selloff, the DIA drifted back down below it 50-day while the SPY, QQQ, and IWM held on to this key psychological support.  Facing our biggest day of earnings reports so far this quarter as well as an FOMC rate decision, we can expect significant price volatility.   With the indexes, so extended traders will have to shoulder the substantial risk of pullback to enter long positions.  That said, with hopes of a stimulus deal on the horizon, entering short positions also carries substantial risk.  Set aside emotion and plan carefully in this very news-driven market.

Trade Wisley,

Doug

The Whitehouse Battle Continues

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Whitehouse Battle

With the Whitehouse battle likely to extend for days and the Congressional bodies remaining in mixed party control, uncertainty and the challenging price volatility are likely here to stay.  What does this mean for the hoped-for stimulus package?  Will the Presidential election become a long drawn out market damaging court battle?  A lot for investors to ponder as we now wait on an FOMC rate decision Thursday afternoon.  Expect considerable sensitivity to news events as the market tests price and technical resistance levels in the index charts.

Asian markets closed mixed but mostly higher in a volatile session as the monitored polling results.  European markets are trading with modest gains across the board this morning.  After a night of wild price swing, U.S. Futures are trying to remain bullish ahead of earnings and the beginning of the 2-day FOMC meeting.  I think it fair to say anything is possible, so remain focused and flexible.

Economic Calendar

Earnings Calendar

On the post-election hump day, we have just under 90 companies fessing up to quarterly results.  Notable reports include ALB, ALL, AWK, APA, FUN, CXW, CRY, DCP, DK, ET, EPR, EXPE, EXR, FIT, GDDY, GDOT, HST, H, JKHY, KGC, LC, LBTYA, MRO, MTCH, MELI, MET, NUS, OUT, PAAS, PAYC, PRGO, PSA, QCOM, SGMS, UMH, UPWK, VOYA, WEN, & ZNGA.

News & Technicals’

Yesterday’s colossal rally was one of the best election day performance in stock market history.  Overnight futures have seen considerable volatility as the Presidential election is close to call, and election officials suggest it may take several more days to count up the results.  Last night was a much different result than many thought as the republicans gained seats in the House and held onto control in the Senate.  The House will remain under Democratic control setting up a challenging environment for whoever occupies 1600 Pennsylvania Avenue.  In a late-night speech, President Trump suggested a supreme court battle election battle is on the horizon.  I suspect a court contested election battle will keep the market on edge and the price volatility high in the days and possibly weeks ahead.  As we wait, the market will turn its attention toward the FOMC meeting that begins today with their rate decision scheduled for Thursday afternoon.  In other news, several states voted to legalize the recreational use of marijuana, and Florida voted to raise the minimum wage to $15 an hour. 

In just 3-trading days, the Dow has rallied more than 1300 points off the Friday lows, taking the T2122 indicator from an oversold condition that now suggests an overbought condition.  With control of the Congressional body’s mixed, there remains considerable uncertainty about the likely stimulus plan’s size that will keep the market guessing.  An uncertainty that’s likely to extend as long or longer than the battle for the WhiteHouse.  The VIX closing above a 35 handle even as the indexes lept higher price action is likely to remain challenging as the indexes challenge technical resistance levels in the charts.

Trade Wisely,

Doug

Do you feel Lucky?

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Do you feel lucky

Do you feel lucky?  A question all traders will have to ask themselves today as they plan for the possibility of massive volatility in the aftermath of election day.  Back to back, 400 point gaps will push the index charts into substantial price resistance levels.  As we always say in Right Way Options, gaps are gifts. Heading into such an uncertain outcome may be wise to capture those gains and reduce the risk because anything is possible in the next 24 hours.  Experienced day traders will have the upper hand while swing and position traders will have to roll the dice and hope.  Be very careful!

Asian markets rallied overnight, reacting to the Australian central bank lowering rates.  European markets are decidedly bullish this morning, with the FTSE and CAC surging more than 2% this morning.  Ahead of a very news-driven day with both earnings and economic data on the horizon, futures point to another big gap up open.   Expect significant price volatility.

Economic Calendar

Earnings Calendar

With nearly 90 companies reporting their quarterly results on this election day, we can expect considerable volatility.  Notable reports include BHC, CC, DS, ETN, EMR, EXC, EXPD, FOXA, GCI, IT, GAIN, GWPH, HTA, HUM, LPX, PRU, RHP, SYY, TRI, & W.

News & Technicals’

U. S. Futures early this morning suggest back to back 400 point gains!  The indexes have experienced a short-term oversold condition, but I must admit a bit of surprise to see the wild bullishness on an uncertain election day.  As polls open across the country, businesses have boarded up, bracing for the possibility of riots in the aftermath.   Although the voting will be over, will all the uncertainty be over, or will this election drag on being contested?  On the virus front, Connecticut decided to roll back reopening as infection rates continue to surge. Let’s hope for the sake of the economy; this is not a trend that accelerates across the country with infection rates rising and antibody drugs in short supply. 

With another big morning gap up, traders holding long positions may want to consider it a gift and take the profits ahead of the possible election results volatility.   It’s entirely possible the T2122 indicator could flip from oversold to overbought with the substantial gaps in the last couple of days.  Remember the wild market volatility of past election days as you plan your risk heading into the close today.  If the morning gap holds to the open, keep in mind the DIA, SPY, and IWM will be testing significant price resistance levels.  Place your bets and roll the dice because anything is possible over the next 24 hours.  Adept day traders will have the upper hand as swing and position traders will find it nearly impossible to hold on to an edge. The question is, Do you feel Lucky?

Trade Wisely,

Doug

Bulls Fight Back

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Fight Back

The bulls indicate a willingness to fight back this morning, with the market finally bouncing from a short-term oversold condition.  That said, anything is possible in the next few days as businesses shut down and board up their building in anticipation of the possible election aftermath.  A quick study of the enormous emotional price swings during the 2017 election would suggest whipsaws and full reversals are possible in the coming days.  Plan your risk accordingly.  Experienced day-traders will likely have the upper hand so expect substantial price volatility over the next few days.

Asian markets closed green across the board last night, with China reporting growth in manufacturing activity.  European markets are also bullish this morning despite news of the pandemic related lockdown of England this weekend.  Ahead of earnings, PMI and ISM Manufacturing, and construction spending data, the U.S. futures are leaping higher this morning as a relief rally begins.

Economic Calendar

Earnings Calendar

We have nearly 70 companies stepping up to report quarterly results this Monday.  Notable reports include AMC, AMCX, AWR, CWH, CDW, CLX, CVI, FANG, EL, FE, FRPT, IR, LEG, LDOS, L, LL, MPC, MDLZ, NI, ON, PYPL, O, SWKS, RIG, VNO, WM, & WMB.

News and Technicals’

After a rough week of selling that tested the DIA 200 and 500-day averages, the bulls are trying to get back to work this morning, pointing to a substantial gap up at the open.  We closed last week with the T2122 indicator suggest and extreme oversold condition in the short-term, but we will have to be careful with such a strong bounce on the eve of such a news-driven Presidental election.  According to reports, businesses have begun boarding up windows and shutting down, fearing the possibility of riots breaking out based on election results.  Over the weekend, England, a countrywide lockdown of all non-essential business as Covid cases continue to rise across the eurozone.  The U.S. cases spiked to a record high on Friday, with nearly 100K new infections reported.  One has to wonder what kind of policy impacts we might face in the U.S. to combat COVID once the election is over?

With markets currently pointing to a considerable bounce this morning, we should expect the massive price volatility to continue as election and pandemic uncertainty looms.  The relief rally could quickly start a short squeeze trader hurry to cover positions held over the weekend to preserve profits.  However, with the possibility of politically charged news over the next few days, traders will have to remain very nimble.  What for quick intraday whipsaws or even full price reversals that could occur overnight.  Just remember the massive price swings in 2017 as the election emotion shifted violently.  Adept day traders will have the upper hand, with swing and position traders having little to no edge as the future unfolds. 

Trade Wisely,

Doug