The ECB delivered as expected, and the President said he is
willing to consider an interim trade deal adding rocket fuel an already extended
rally lifting the SPY temporarily to a new record high print. After 8-days up it hard to be a buyer but the
bulls are working hard this morning suggesting more than a 100 point Dow gap and
possibly secure more records before the weekend. With the FOMC expected to deliver even more
stimulus next Wednesday the momentum remains firmly with the bulls.
Overnight Asian markets closed with green across the board with
growing optimism of a trade deal. European
markets are mostly bullish this morning after the aggressive ECB move even as
worry of a German recession grows. The US
Futures point to another triple point gap up in the Dow on its 8th
day of rally that has recovered nearly 1400 points. Consider the risk carefully you carry into
the weekend as this rally become very extended.
On the Calendar
On the Friday Earnings Calendar, we have just 11 companies
reporting results. Looking through the
list I can find none that are particularly notable.
Action Plan
Although there was some light selling as we moved into yesterdays
close the bull, remain solidly in control with relentless upside pressure. Having said that with the indexes up 8-days
in a row and looking to extend that streak this morning, I don’t see this as a
buying opportunity. Heading into the
weekend with a gap up open on Friday seems more a profit-taking rather than a
day to add risk.
Our T2122 indicator is flashing an extreme over-bought short-term
condition, but I wouldn’t bet on a selloff until we see something in the price
action that suggests the bears are willing to fight back. That could begin today, but with the bullish
momentum and an FOMC expected to provide more stimulus I wouldn’t be surprised if
the bears have already taken the rest of week off. Have a wonderful weekend everyone!
The huge Institutional rotation into value plays created an amazing melt-up in index prices yesterday. Traders can witness this massive shift with a quick study of value ETF’s that have moved up so quickly they are nearly parabolic. Adding fuel to the fire is the expected ECB stimulus package and the likely accommodative FOMC decision next Wednesday. Toss in the Trump tariff delay from Oct. 1 to the 15 in what he called a goodwill gesture, and we have the recipe for new record highs in the indexes. I would be careful chasing this rally at this point considering the Dow has already rallied more than 1100 points in just 7-days of trading.
Asian markets mostly rallied on the Trump tariff delay news
but continue trouble in Hong Kong kept the HSI in the red at the close of
trading. European indexes have reversed
earlier gains on fears of a German recession even as the ECB is expected to
make an accommodative decision today.
Undeterred by European concerns the US Futures point to yet another gap
up open to challenge the all-time high resistance levels in the DIA, SPY, and
QQQ.
On the Calendar
The Thursday Earnings Calendar indicates that 25 companies are
confessing their quarterly results. Notable
reports include KR, AVGO & DLTH.
Action Plan
An amazing rally yesterday as the indexes relentlessly marched
higher. To put this extraordinary rally
into perspective, the Dow has gained more than 1100 points in just 7-days or
trading. A big portion of the rally
seems have occurred in a huge institutional rotation into value plays that happen
to be heavier weighted in the indexes. Also,
there appears to be a substantial rotation out of safety plays, such as precious
metals and bonds into stock value plays.
One reason for this is the expectation that ECB and the FOMC
will both provide a monetary backstop to fears of slowing world economies. The president in what he called a goodwill
gesture in delayed the tariffs that were scheduled to increase on October 1 to
the 15th of the month. As a
result this short-term over-extended market is pointing to further extension
this morning. The tariff extension,
continued institutional rotation, and the likely ECB stimulus package expected
today could easily inspire the bulls to set new record highs in the
market. I would, however, caution traders
to be careful not to chase this rally after so many days up. Profit-taking could begin at any time so keep
a watchful eye on price signals.
Today we remember one of the most tragic days in US history,
September 11th, 2001, where nearly 3000 fellow citizens died. First responders that give their lives that day
will be honored this morning at the market open with the ringing of the
bell. We are also waiting to see if the
ECB will provide a stimulus package and the latest reading of the Producer Price
Index. The bulls and bears continue to
battle in a very tight and challenging to trade chop. Perhaps the market can find some inspiration from
the ECB today, or perhaps we continue to chop as we wait on the FOMC next Wednesday.
Asian markets closed mixed waiting on the ECB, and Apple
suppliers rallied on the unveiling of their new product yesterday. European markets are green across the board
this morning in anticipation of their central bank decision. The US Futures point to a modestly higher
open waiting on the ECB. There is something
about the smell of freshly printed money that the bulls can’t get enough of and
just maybe the ECB will score them the fix they desire.
On the Calendar
The hump day Earnings Calendar has 24 companies expected to
report results. ACB & TRLD are among
the notable reports today.
Action Plan
As we remember and honor the nearly 3000 Americans that died
on September 11th 2001 we wait to hear from the ECB and a possible
stimulus package. There is not much that
the market loves more than the smell of freshly printed money. It’s a little like a heroin addict that knows
the drug is not good for them, but the immediate gratification of the next high
outweighs the long-term effects. The damaging
effects of debt no longer appears to matter as long as the market continues to
go up in the short-term. The President agrees
tweeting just a few minutes ago, “Fed boneheads’ should cut interest rates to
zero ‘or less,’ US should refinance debt.”
Wow!
US Futures point to a slightly higher open this morning as
we wait on the ECB and ahead of PPI numbers at 8:30 AM Eastern that is expected
to decline according to consensus estimates.
Although indexes continue to show signs of short-term overbought
conditions the bulls currently seem determined to attack all-time highs and a
stimulus package could be just the inspiration to get it done. However, we could also see more choppy price
action as we wait for the FOMC to chime in on interest rates next Wednesday. An institutional rotation seems to be underway
with risk coming out to defensive assets and rolling into value plays such as financials
and energy.
Are you frustrated with the current price action, overnight
gaps and go nowhere choppy days? Do you
feel as if your missing out and feeling the pressure to trade not wanting to
miss out on your share? Believe me; you
are not alone! I speak with may traders
every day that share the same frustration with this uncertain news-driven market. Those that succumb to the emotion of missing
out have and continue to suffer significant losses while traders standing aside
waiting for their edge to return are equally frustrated by the market condition
but retain their capital as they wait.
Are you holding onto an edge, or are you trading on emotion and
finding your account suffering as a result?
The choice is yours. You are the
CEO of your trading business. The buck
stops with you! It’s perfectly okay to
feel frustrated with the current condition of the market and the wild price action. That’s normal, but if you’re giving up your
trading edge and allowing your emotion or sheer boredom to guide your trading
your capital and your confidence will both disappear very quickly. Make your choice!
On the Calendar
We have just 14 companies on the Earnings Calendar to fess
up to quarterly results. Notable reports
today include GME, PLAY, RH & ZS.
Action Plan
Choppy consolidation consumed the vast majority of yesterdays
price action. However, it would seem there
is an institutional rotation underway selling-off market leaders and picking up
value plays. The rotation also appears
very targeted into heavily weighted index names that have significant impacts on
overall index valuation. Overnight Britain’s
Prime Minister failed in his attempt to force a new vote on Brexit creating a
stalemate with Parliament as the deadline nears. Forty-Eight states have joined an antitrust
investigation into GOOG while 11 states have joined in antitrust investigations
into FB. Big Tech is also under federal antitrust
scrutiny as AAPL, FB, GOOG & AMZN come under fire.
US Futures rallied off overnight lows currently pointing to
modestly lower open. We have the APPL
dog and pony show this morning as they unveil there new iPhone line up so
expect some volatility in the stock. I
would not be surprised to see continued choppy price action as the market waits
and hopes on as ECB stimulus package later this week and the FOMC decision Wednesday
the 16th. Of course, any is
possible in this emotional and news-driven market, so plan your risk carefully.
Hong Kong citizens ask for US help to gain their freedom while
China directly accuses members of Congress of inciting new violent riots that
resumed last night. How will this affect
the scheduled US/China trade talks next month?
The Taliban issued a direct threat to US lives after the President
abruptly canceled peace talks, and Afghanistan is said to be bracing for
violence. The British Prime Minister is
once again attempting to force a vote on Brexit today while at the same time a
new Parliamentary bill to block the action is supposed to go into effect today
as well. With all this in play the bulls
are pushing for another gap up open continuing to stretch toward all-time highs.
Overnight Asian markets closed mixed but mostly higher as
Hong Kong protests flair up and Chinese exports unexpectedly decline. European markets are also mixed but mostly
lower at this hour as the Brexit battle continues and hoping for an ECB stimulus
action. US Futures point to another gap
up open ahead of a light day of earnings reports and a quiet economic calendar. I would not rule out the possible pop and
drop, and I would also not be surprised to see the bulls try very hard to keep
the momentum marching higher.
On the Calendar
The Monday Earnings Calendar expects 25 companies to fess up
to quarterly results today. The notable
report of the day is CTRP.
Action Plan
The US pulls out of peace talks with the Taliban this
weekend and violent protests once again break out in the streets of Hong Kong. While Hong Kong asks for US help to gain
freedom, China is directly accusing members of Congress for encouraging the
riots. One would rationally assume that could
be a major stumbling block to the scheduled trade talks scheduled next month.
Whether focused on the hopefulness of a future rate cut or
the sheer momentum of the current rally, the US Futures point to a bullish open. In the UK, Prime Minister Boris Johnson is
once again trying to force a vote for a no-deal Brexit while at the same time Parliament’s
new bill to block such an action goes into effect today. How all the uncertainty warrants the US markets
rallying toward record highs in the light of declining job increases makes little
sense. T2122 suggest we are at or very
near a short-term overbought condition, so watch the possible pop and drop but
don’t ignore the bullish momentum as this all or nothing emotional trading
continues.
After gaping up triggering a brief short squeeze, the market
chose to chop sideways the rest of the day once again leaving the biggest price
action of the day in the gap. The question
for today is whether the Employment number and the Powell speech will inspire
for the bulls to push higher or if the bears will get the energy to attack backfilling
the gap below. After rallying nearly 850
Dow points in just 3-day on nothing more than a commitment to talk about trade
in month one has to wonder if emotion got way too far ahead of common sense?
Overnight Asian markets closed the week with green across
the board as Hong Kong protest subside.
European markets appear tentative and mixed this morning with the swirling
uncertainty of Brexit as they head into the weekend. Ahead of the Employment Situation Report, the
bulls are pushing for another gap up open but how the market actually opens
will greatly depend on the reaction the 8:30 AM report. Get ready for a wild day as we close out this
gap a day week and head into the uncertainty of the weekend.
On the Calendar
On the Friday Earnings Calendar, we have just 10 companies
reporting results. About the only somewhat
notable report is GCO.
Action Plan
A day after a short squeeze triggered on news that the US
and Chian will return to the negotiations table traders are now holding there
breath hoping the employment numbers will allow the bullishness to continue. The ADP report and the consensus estimates
suggest the economy created more than 160K jobs last month and that the unemployment
rate will remain flat. Currently the US
Futures, suggest a desire to extend the short squeeze into the weekend. However, a surprise miss would likely quickly
reverse that sentiment, and if the number were to come in better than expected
what would that mean for the hoped-for interest rate cut?
Technically speaking yesterday’s gap and go nowhere price
action saw key resistance levels broken and the DIA, SPY, and QQQ closed above
their respective 50-day averages for the first time in more than a month. Unfortunately, the 3-day gap riddled rally
has moved the indexes from a short-term oversold condition to a short-term
overbought condition according to the T2122 indicator. So the question is can the bulls hold on to this
big bullish reversal or will the bear’s attack and fill the big gap below? That leaves some tough choices for traders as
we head into the weekend.
High emotion continues to govern the market price action
this morning with yet another large news-driven morning gap. China and the US have agreed to hold
ministerial-level talks one month from now with deputy-level talk not expected
until mid-September. While it is very
good news that we will return to the negotiations table, a lot can happen during
that month of waiting as the uncertainty swirls around the market. I guess what I’m saying is that the All-Clear
is a long way off so expect volatility to continue and carefully plan your risk
as we navigate through this new-driven minefield.
Overnight Asian markets Asina markets closed mixed but
mostly higher as traders closely monitored the developments in Hong Kong. Currently, European markets have mixed
results but mostly modestly higher, reacting to UK developments and China-US
news. US Futures are very happy this morning
ahead of a big day of economic reports and earnings. The Dow points to gap up of nearly 250 points
as it waits for the data dump.
On the Calendar
The Thursday Earnings Calendar is the biggest day of reports
this week with more than 40 companies reporting. Notable reports include LULU, ZM, CIEN, DOCU,
GIII, LE, MDLA, FIZZ, SIG, and ZUMZ.
Action Plan
US and China have agreed to hold ministerial-level trade
talks in early next month with the deputy-level meetings not taking place until
mid-September. British Prime Minister
Boris Johnson has now failed in his attempt to force a no-deal Brexit by the
end of October stabilizing the Sterling and kicking the can further down the
road. US Futures are bullish on this
news ahead of busy morning on the Economic Calendar as well our biggest day of
the week for earnings reports.
So once again the market is expected to significantly gap
this morning, but at least it’s in the same direction as yesterday’s gap up and
chop price action. Honestly, I have a
hard time understanding agreeing to talk about trade one month from now warrants
a gap of more than 200 points. However,
I also have to say that I’m not all that surprised considering how erratic and
emotional the price action has been over the last month. The question now is, can it hold as the
uncertainty swirls around us for another month.
I guess at this point we should not be surprised to see yet
another overnight reversal and once again confirming traders cannot trust price
the price action from one day to the next. After the market closed yesterday we learned
that Parliament voted to take control of the government and will today attempt
a vote to block a no-deal Brexit attempt by the Prime Minister. We also learned that Hong Kong has finally
withdrawn the China extradition bill that sparked so much public unrest.
Asian markets closed higher across the board last night with
the HSI zooming up 995 points after the withdraw of extradition bill. European market sees green across the board, and
the Sterling has recovered after the UK Parlement vote blocking the Prime
Ministers no-deal Brexit plans. Consequently,
US Futures point to a gap up with the Dow currently expected to open about 200
points higher ahead of earnings and a full of FOMC speakers.
On the Calendar
On the hump day Earnings Calendar, we have 26 companies
reporting quarterly results. Some of the
notable reports include WORK, AVAV, AEO, HOME, CLDR, MIK, PANW & VRA.
Action Plan
Tuesday morning brought out the sellers after manufacturing numbers declined, but the bulls found some inspiration recovering slowly but steadily throughout the afternoon. Tensions are high today in the UK after a majority voted to take control of Parliament. The action blocked the Prime Ministers plans to suspend Parliament forcing a no-deal Brexit. Later today Parliament will vote in an attempt to block the Boris Johnson no-deal plans scheduled for October 31. We could see US market volatility as a result. Hong Kong markets experienced a huge rally during the night when leader Carrie Lam announced the withdraw of the conversational extradition bill.
As a result of all the overnight news, US Futures point to a
bullish open ahead of earnings reports and the International Trade numbers set
for 8:30 AM Eastern release. Consensus estimates
suggest a decline in the trade deficit in July.
We also a full day of Fed Speakers between 9:30 AM and 3:15 PM with a
total five FOMC members on the calendar.
All in all just another day of market turmoil with yet another overnight
reversal gap making price action nearly impossible to trust from day-to-day.
While all eyes focused on the approaching Florida storm it seems
there was another storm brewing in currency markets this weekend. The British Sterling dropped by $1.20, and
the Euro slipped to a 28-month low not to mention Argentina that is nearing
total financial collapse and Lebanon declaring a state of economic
emergency. Certainly, an uncomfortable backdrop
for the market as new US-China tariffs took effect on Sunday and spilling August’s
volatility into the beginning of September.
Overnight Asian markets closed mixed but relatively flat while
Australia decided to keep interest rates unchanged. Across the pond, European markets are
slightly lower across the board as they deal with the uncertainty of Brexit and
the Sterling selloff. Here in the US,
futures markets are trying to rally off of overnight lows ahead of a big week
of economic data but still point to a substantial gap down open adding to the
technical damage of the index charts.
Hang on as the storm clouds continue to stir with uncertainty.
On the Calendar
On this morning’s Earnings Calendar, we have just over 34
companies reporting results. Notable reports
include CONN & COUP.
Action Plan
An eventful holiday weekend as Hurricane Dorian as lashes the
coast of Florida, Argentina nears financial collapse, the British Sterling falls
below $1.20 while the Euro slides to a 28-month low and additional US-China
take effect. The Market also faces a busy
Economic Calendar beginning with Housing data as well as the ISM Index today
and ending the week with the Employment Situation report Friday morning. It seems the market uncertainty that plagued August
markets will spillover into September keeping traders on edge and price
volatility high.
Although the US Futures are currently trying to bounce off
of overnight lows, it seems likely markets will open with a substantial gap
lower putting pressure on hopeful traders that picked up risk heading into the
weekend. With traders possibly extending
their holiday vacations and the disruptions that Hurricane Dorien could produce
anything is possible. Keep an eye on the
gap below that was created last Thursday that could easily fill if the bears find
inspiration after the morning gap.
As the Labor Day weekend approaches the bulls look to extend
yesterday’s rally with yet another substantial gap up open. The all or nothing emotional price action has
become tiring and honestly ridiculous considering tariffs remain in place and
negotiations have yet to begin. Having said
that, it’s still nice to have a relief rally!
The question now is, can it hold as traders head out for the long weekend,
hurricane Dorian targets the Florida coast and growing uncertainty of earnings growth?
Asian markets closed the week mixed but mostly higher as Beijing
signals a desire to come back to the negotiations table. European markets see green across the board
on the easing of trade war rhetoric even as a no-deal Brexit threat grows. The US Futures are in celebration mode this morning
pointing to another substantial gap higher of more than 100 Dow points. Be careful not to chase the open and don’t be
surprised if the price action quickly runs out of steam and become light and
choppy as traders head out to enjoy the long weekend.
On the Calendar
On the Friday Earnings Calendar we have just 14 companies
reporting with BIG, CPB, and JKS among the notable.
Action Plan
Yesterday’s big rally is getting a big gap follow-through
this morning extending the indexes into a short-term overbought condition
according to T2122. With the Labor Day
weekend just around the corner, volumes could quickly decline as traders take
off early for the extended weekend vacation.
Market emotions are high that a deal will be forthcoming, but a lot can
happen over a 3-day weekend so plan your holdings accordingly.
According to forecasts, hurricane Dorian is likely to make
landfall on the Flordia Coast Monday. For
all our Flordia friends I wish you safety as you make preparations to protect
your homes and property. It now appears the storm will slow down and strengthen
so, and please don’t brave the storm, get yourselves to safety and wait it
out. Dangerous storms such as this can
have also have substantial market impacts that affect price action so prepare for
more volatility come Tuesday morning.
