Abounding optimism of a trade deal has the market surging higher this morning even though we have not seen any details as to what negotiations have produced. Will there be a deal, a partial deal or could this morning gap be irrational exuberance? Could this trigger a huge short squeeze that drives short traders of the market, or might this create a big pop and drop pattern if we learn there is no deal and tariffs increase next week? The bigger question is, how will you manage your risk as we head into the weekend if we have no answers to these questions by the close of today?
Overnight Asian markets closed the week green across the
board on trade optimism. European markets
are also decidedly bullish this morning amid rising hopes of a Brexit deal
coming together. US Futures point to a
wildly bullish gap up open of more than 250 Dow points as the President, and
the Vice-Premier conclude the 2-day meeting today. With such an emotionally charged market, remain
flexible and prepare for volatile price action in reaction to trade
developments.
On the Calendar
We have 14 companies expected to report on the Friday
Economic Calendar. Notable reports include
FAST and INFY before the open today.
Action Plan
Looking at the US Futures this morning, I’m honestly speechless
at the huge bullishness this morning after positive comments on negotiations
with early today. It seems we’ve been
down this road before that ended with no deal, but the market is wildly this
morning even though there have been no details released. Perhaps we’ll know more later today but be prepared
for potential violent volatility as the news rolls out. There is also hopeful news from across the
pond that the British Prime Minister and the EU have found some common ground after
reporting a path to a Brexit deal is improving.
Today’s huge gap up could trigger a big short squeeze
forcing the market even higher. T2122
could easily swing from short-term oversold to short-term overbought all at
once, making a mess of the chart technical.
We should also not rule out the possibility of a pop and drop pattern
that could quickly develop if the trade news happens to spin the opposite direction. The big question for me is, what happens if
we hear no details on trade negotiations until after the market closes? How much risk are you willing to hold into
the weekend? Plan carefully and remain
focused on price as the emotionally charged market could provide a very wild
ride today.
During the evening and night, we saw just how sensitive to
news reports and how emotionally charged the market has become over China’s trade
developments. While the markets seem to hold
on the notion of a partial deal coming together in the high-level talks, reports
suggest the 2-day meeting may have shortened to just today. Stay tuned, stay focused, and stay very
directionally flexible as each new report could substantially move the market violently. Plan your risk carefully.
Asian markets recovered early losses by the close of the day
on conflicting reports regarding trade.
European markets are trade cautiously mixed as negotiations resume in
Washington DC. US Futures recovered from
steep losses during the evening and indicated just how quickly market sentiment
could shift as news on progress or non-progress of the negotiations rolls
out. Remember, an October tariff
increase to 30% will happen unless something changes with the US/China
relationship.
On the Calendar
On the Thursday Earnings Calendar, we have our biggest day
of reports this week, with 25 companies fessing up to results. However, there is only one DAL, which is
reporting before the opening bell that’s notable.
Action Plan
Conflicting news reports created a wild night of price
action that saw futures collapse more than 200 points but recovered to near
falt this morning. That’s a clue to just
how emotionally charged and sensitive the market has become over any news on the
high-level talks today. It sounds as if
the China negotiations may start and end today rather than the planned 2-day
schedule. What we know as of now is that
tariffs on 250 billion dollars of Chinese products will increase from 25% to
30% on October 15th.
Traders should prepare for the possibility of very violent
price moves as news comes out concerning the progress of the talks. Technically, speaking the indexes are at a
critical crossroads, with prices hanging just below declining 50-day moving
averages and substantial price resistance just above. With such unstable price moves, this can
become a day-traders market due to will price action fluctuation and the
overnight reversal risks. Carefully plan
your risk and remain very directionally flexible as we wait for news on trade
negotiation developments throughout the day.
The markets gap down and run south as tough talk between US
and China dims the chances of a trade deal Tuesday. However, Wednesday morning, an unnamed
official says China is willing to make a partial deal, but unwilling budge on
any of the core issues and, the market gaps up as this ridiculous price whip continues
to chop trader’s account to pieces. Before
you jump into this morning’s gap keep in mind the indexes continue to show current
downtrend with 50-day averages in decline.
Fool me twice, shame on me!
Asian markets closed mixed and mostly lower on the uncertainty
of trade talks that begin on Thursday.
Responding to the Bloomberg report and hopefulness of a partial trade deal
European markets are higher across the board this morning. US Futures rose sharply after the 6 AM news
story and indicate the Dow will gap up between 150 and 200 points at the open
as we wait for the release of the FOMC minutes later today.
On the Calendar
On the hump day Earnings Calendar, we have just eight
companies reporting their results today, but none are market-moving or
particularly notable.
Action Plan
At 6 AM, Bloomberg reported that an unnamed official close
to trade negotiations that China is willing to make a partial deal. The news quickly spiked the Dow Futures higher
at one point, suggesting a 200 point gain at the open. Apparently, China is willing to commit to purchasing
of farm products if the US stops tariff increases. However, they are unwilling to budge on any of
the major sticking points. The President,
in the past, said tariffs are to increase on OCT.15th if no progress
is made on a bilateral deal. I guess the
good news is that at least today’s gap is to the upside! Trade negotiations begin this Thursday, stay
tuned for future gaps and whips in price.
According to reports, Turkey is about ready to invade Syria,
as US troops pull back as the President attempts to fulfill a campaign promise
to bring our troops home. The UN has
reported they are in a desperate financial situation and may not be able to pay
staff by November because so many countries have failed to pay their dues,
making their peacekeeping operations impossible. Technically, speaking the indexes are in a
current downtrend with declining 50-day averages amidst so much swirling
uncertainty. Be careful not to chase
this morning’s gap, and remember we have the FOMC minutes release at 2:00 PM Eastern
this afternoon.
With the indexes leaving behind shooting star candle patterns
at price resistance levels yesterday seems to suggest that trader’s hopes of
progress in the coming trade talks have diminished. Reports that Brexit talks could be failing is
not helping as currencies fluctuate, and Oct. 31 deadline quickly approaches. Growing unrest between Turkey and Syria due to
the Presidents decision to withdraw US Troops and increasing tensions between
Iraq and Ecuador rising oil prices, it’s no wonder market prices continue to so
volatile and extremely challenging to trade.
It’s truly a day-traders market with all the unrest and news sensitivity
and changes market direction in half a heartbeat.
Asian market rallied to close green across the board last night
as China television banned NBA broadcasts over Hong Kong protest comments. European market are however decidedly bearish
this morning as trade hopes sink and a no-deal Brexit grows. US Future points to a substantial gap down
this morning as it faces so much uncertainty in the coming days.
On the Calendar
On the Earnings Calendar, we have 11 companies reporting
quarterly results today. Notable reports
include HELE, LEVI, and DPZ.
Action Plan
Reports this morning suggest Brexit talks are breaking down quickly
hit the currency markets as the sterling fell in reaction. The President’s decision to bring US Troops
home from Syria has drawn rebuke from his most staunch supports in Congress and
increasing the likelihood that Turkey will invade Syria further destabilizing the
region. Oil prices are on the rise this
morning, with increasing tensions between Iraq and Ecuador escalate. Ahead of trade negotiations, the US dollar is
pulling back, and gold is on the rise this morning, and the Chinese media
suspends NBA broadcasts over comments supporting Hong Kong protests.
Top off all this unrest with tough talk from China and hopes
of a productive outcome of this week’s talks seems to have greatly dimmed this morning. With the index charts testing price
resistance levels yesterday and leaving behind bearish shooting star patterns, a
pullback to is not a big surprise.
However, the futures seem to be painting a grim picture this morning with
a substantial gap down expected amidst all the swirling uncertainty. I continue to expect unruly and price action driven
by the news reports that can chop a trader’s account to pieces.
After a big short squeeze rally in reaction to the jobs
number that suggested a 2020 recession is less likely but left the door open for
more rate cuts, the US indexes are once again knocking on the door of price resistance. With trade talks set to resume this week and threatened
tariff increases scheduled next week, traders should prepare for a news-sensitive
market. As protests continue to disrupt
Hong Kong and amidst impeachment proceedings, perhaps an interim agreement could
be reached to at least delay future tariff increases by both countries, but I
wouldn’t hold my breath in anticipation.
Last night Asian markets closed down across the board with all eye on the forthcoming trade talks. European markets are, however, cautiously bullish this morning ahead of trade talks and a rapidly approaching Brexit deadline. US Futures have rallied substantially off of overnight lows but continue to suggest a slightly lower open as uncertainty swirls and with significant technical resistance levels just above. With little on either the earnings and economic calendar for the market to react to, I would not be surprised to see a choppy price action today.
On the Calendar
On the Earnings Calendar we have just eight companies expected
to report today, but none of them are particularly notable.
Action Plan
The Employment Situation report Friday was strong enough to ease
concerns of a US recession in 2020 but not so strong that the market still
believes in another rate cut is on the way.
Combine that with a short-term oversold condition, and short squeeze trigger
huge rally right back into price resistance levels. As the US and China prepare to resume trade
talks this week, the news spin cycle it running at full speed likely to create
will price swings as they speculate on the outcome. Many are hoping for at least an interim agreement
to stop that would stop the possible tariff increases set to increase next
week.
With the ongoing Hong Kong protests and impeachment proceedings,
both countries have good reason to get this frustration behind them, but I would
not expect either side to give in easily.
Futures have rallied this morning off the overnight lows that had
suggested a substantial gap down. With
no notable earnings to react to and a very light economic calendar, expect the
market to be very new sensitive with choppy price action. The indexes have substantial price resistance
levels above to deal with, and after a 2-day rally of more than 800 Dow points,
a little rest or consolidation would not be a big surprise as we wait for trade
talks to resume.
With the world is watching and inquiring minds wait in anticipation for the release of the Employment Situation number and how it will impact today’s open. Can it provide the bullish inspiration needed to follow-though on the hopeful bullish hammer patterns left behind yesterday, or will is disappoint adding fuel to the fire of a slowing US economy? How we end this trading week will greatly depend on this key metric and will shape how the market opens today.
Asian markets were mixed overnight as Hong Kong imposes emergency
law as anti-China protests continue to disrupt the city. As of the writing of this report, European markets
are mixed but mostly higher, but expect that also greatly fluctuate depending
on the result of the US Employment numbers this morning. US Futures are currently pointing to a lower open,
but that’s likely to change significantly after the 8:30 AM release of the
Employment number. Buckle up; it could
be a volatile end to a week of technically damaging and tumultuous price action.
On the Calendar
On Friday’s Earnings Calendar, we have just five companies
reporting results today with none that would say are market-moving or particularly
notable.
Action Plan
Our last notable earnings report for the week, COST,
slightly beat on estimates but seems to have disappointed investors that were
hoping for a strong showing for the quarter.
Interestingly that single report seemed to influence the trading of the
overnight futures. Protests continue to have
damaging impacts on Hong Kong after the city declared emergency law last
night. This morning’s total focus of the
market focus on the Employment Situation number that comes out an hour before
the market open. The consensus is
expecting 145K jobs with a low range of 120k and upper range of 179k. Of course a surprise beat or miss of the key
metric could have a profound impact on how the market opens today.
Yesterday the Dow briefly dipped below it’s 200-day moving
average while the SPY and QQQ managed to bounce before reaching this key support. Unfortunately, the IWM is well below the 200-day
average and will soon display the death-cross with the 50-day dipping below its
200-day. All the indexes experienced a
nice bounce rally yesterday leaving behind hammer candle patterns seen as
potential bullish. However, if price
action is unable to follow through to the upside today the significance and hopefulness
of the hammer pattern diminishes dramatically.
Thus, there is a lot at stake for the Employment Situation report, and
the world is watching.
After a punishing selloff, the market will face an expected
decline in Factory Orders and the ISM Services Sector report this morning the worry
that the global slowdown has expanded into the US economy. Following a win where the WTO agreed with the
Whitehouse, the President has scheduled 7.5 billion in European new tariffs on
OCT. 18th, opening a new front on the trade war and raising concerns
of recession.
Asian markets closed mixed but mostly lower on the ramp-up of trade tensions in Europe. Across the pond, European markets also trade mixed as concerns about how the new tariffs will affect there already weakening economy. Currently, US Futures point to a modestly bullish open ahead of economic reports. Remember we have the Employment Situation report before the open Friday, so plan your risk carefully and don’t be surprised if the price action becomes stale and choppy as we wait.
On the Calendar
On the Thursday Earnings Calendar, we have 12 companies reporting
results. Notable reports include STZ,
COST, and ISCA.
Action Plan
Following an ugly 2-day selloff after a disappointing ISM Manufacturing
report, we will get a reading on the service sector with the ISM Non-Mfg report
at 10:00 AM eastern along with Factory Orders.
The consensus is expecting only a small decline in the services number and
an expectation that orders will slip negative that could raise fears of a spreading
global slow down. After the World Trade
Organization ruled that European government subsidies on aircraft is an unfair
trade practice; they cleared the way for the US to impose new tariffs. The President has scheduled 7.5 billion in tariffs
to increase on OCT 18th widening the trade tensions and raising
concerns of a US recession.
Technically speaking T2122 suggests a short-term oversold
condition, but it will be interesting how the market responds to the opening of
another trade war front in Europe. After
two strong days of selling the Dow continues to hover above its 200-day average
as does the QQQ and SPY. Unfortunately,
any market relief rally must come under scrutiny as a possible lower high that may
confirm the beginning of a market downtrend.
Of course, with the Employment Situation number on Friday, 4th
quarter earnings just around the corner, and trade talks with China to resume
soon traders will have to prepare for just about anything.
An unexpectedly poor manufacturing number quickly reversed early
bullishness yesterday creating a nasty whipsaw and leaving behind some worrisome
price patterns. The major indexes all
dipped below their 50-day averages by the close as they each left behind
bearish engulfing patterns in the process.
Most troubling was the notable reversals in the financial, transport,
and technical sectors. Technical
failures in an already uncertain market will likely spark some fear in the
market so prepare for higher volatility in the days ahead.
Overnight Asian markets closed in the red across the board in
reaction to global slowdown fears. Market
in Europe is also looking lower this morning as they wait for the Prime Minister
to unveil a revised Brexit proposal for the UK.
US Futures have bounced off of overnight lows but still point to substantial
gap down this morning and a possible short-term oversold condition according to
the T2122 indicator. Expect price action
to be volatile, news sensitive and, challenging even for very experienced
traders.
On the Calendar
On the Wednesday Earnings Calendar, we just 12 companies fessing
up to quarterly results. Among the
notable reports, today are BBBY, LEN, AYI, LW, and PAYX.
Action Plan
On the day after JNJ pays a large fine to settle their roll
in the opioid crisis, traders might be
looking for something to relieve the pain of yesterday’s selloff and the
substantial gap down setting up this morning.
By the close on Tuesday all the major indexes slipped below their 50-day
moving averages leaving behind some worrisome technical damage in the
charts. A surprisingly disappointing
manufacturing number created an ugly whipsaw that left bearish engulfing
candles all over the place yesterday.
Notable reversals in the financial sector and transports and
the technical damage in the tech sector are particularly troubling. At the time of writing this report, US Futures
have bounced off of their overnight lows but still suggest a gap down of
nearly 150 Dow points at the open. According to the T2122 indicator this will
create a short-term oversold condition so be careful not to chase bearish
positions already well into their move lower.
Remember this is a very emotional news-driven market, so plan your risk
carefully and be willing to take profits quickly as they can be very fleeting in
this environment.
As this frustrating range-bound consolidation continues, we can thank our friends down under for the possibility of the second day of bullishness as Australia cuts interest rates to just 75 basis points. Of course, we can’t rule out the possibility of a pop and drop pattern by the end of the day, but at least for now the bulls seem inspired to follow-through on yesterday’s rally. With the uncertainty of 4th quarter earnings and China trade negotiations scheduled in the new 2-weeks, I wouldn’t be all surprised to see the price action remain choppy and range-bound.
Overnight Asian markets recovered from early bearishness to
close mostly higher in reaction to the Australian rate cut. European markets are not sharing in the bullishness
currently flat to mostly lower this morning.
US Futures point to a modestly bullish open ahead of PMI, ISM, Construction
spending reports as well as a parade of Fed speakers. It would seem October will continue to face
considerable uncertainty and likely to remain news-driven with enough daily gaps
and overnight reversals to keep traders guessing, What comes next?
On the Calendar
The Tuesday Earnings Calendar says we will hear from just seven
companies reporting results. Notable
reports include MKC and SFIX.
Action Plan
We can thank Australia for slashing its interest rates to a
new record low of just 75 basis points inspiring the possibility of a seconded
day in a row of bullish price action.
During the night, Asian markets were struggling until the rate cut but
closed the trading day mostly higher on the news. US indexes remain locked in a choppy range-bound
consolidation that but except for the QQQ’s have successfully held their 50-day
morning averages. On the whole, I would
have to count that a win for the bulls considering all the swirling uncertainty
the market faces.
With 4th Quarter earnings just 2-weeks away, it’s
sadly possible; the market could continue in this choppy and challenging consolidation. With Washington politics in utter chaos and
pending China Trade negotiations set to begin in a couple of weeks, we should
expect October to remain a challenging news-driven market with enough gaps and
overnight reversals to test the discipline of even the most experienced
traders.
Yesterday’s whistle-blower hearing brought the buyers to a
screeching halt producing another pop and drop pattern. After the hearing, the bulls made a lackluster
attempt to rally that was frustratingly choppy as the partisan rhetoric rose to
a deafening roar of uncertainty. Traders
will have to weigh the risk of the weekend carefully considering that anything
is possible by Monday’s open.
During the night Asia markets closed mixed but mostly lower with
trade talks set to resume on Oct. 10th. The markets in Europe are green across the board
as trade hopes outweigh the US political turmoil. US Futures point to a modestly bullish open
ahead of the Durable Good & Personal Income economic reports. Expect more indecisiveness as we head into
the weekend.
On the Calendar
We have just 14 companies expected to report earnings on the
Friday calendar. Among those reporting,
I’m not seeing any particularly notable reports today.
Action Plan
The frustratingly choppy price action continued yesterday after
once again gaping up then finding more sellers than buyers during the whistleblower
hearing in Congress. The nonstop barrage
of partisan spin is hard to ignore, but it’s imperative that we stay focused on
price action to navigate this very difficult market.
After the close yesterday, we learned that US/China trade
negotiations would resume on Oct. 10th, only 5-day before the
tariffs are scheduled to increase. Let’s
hope the talk fast and that the President is correct when he said a deal is
closer than most think. We have a light
day on the earnings calendar but keep an eye on the Durable Good Orders as well
as Personal Income reports at 8:30 AM Eastern.
With so much uncertainty as we head into the weekend plan your risk carefully. Literally, anything is possible come Monday’s
open!
