After some light jousting with bears during yesterdays
morning session the bulls reasserted themselves once again closing the SP-500
at new record highs. With the US/China
trade uncertainty, rising tensions with Iran and a slew of company warnings
about a difficult earnings season ahead the bulls continue to find the energy to
push higher. The current trends are
bullish and as of now the bears appear to have no teeth.
Asian markets closed lower across the board as trade worries
continue to weigh heavily. European markets
are higher the board with the nomination of Christine Lagard as the new head of
the European Central Bank. US Futures
are currently pointing to a modest gap up open ahead of busy Economic Calendar
and an early market close at 1:00 PM Eastern.
After the morning rush volume could drop significantly as trader’s head out
early to celebrate the holiday.
On the Calendar
On the Wednesday Earnings Calendar we have just two
companies ISCA & OMN reporting today.
They are not notable reports and unlikely to move the market.
Action Plan
We have a busy Economic Calendar this morning with ADP,
International Trade, Jobless Claims, Factory Orders, ISM Non-Mfg & the EIA
Petroleum Status. Although we could experience
a morning flurry of activity with the markets closing at 1:00 PM Eastern, the volume
could decline quickly creating anemic price action.
Yesterday’s price action saw choppy slightly bearish price action
during the morning session but the Bulls refused to let that stand to stage an
impressive comeback particularly in SP-500 that closed at another record
high. Trends are still bullish although they
appear to be a bit stretched however that is not stopping the bulls relentless
push higher as the futures point to yet another gap up open this morning. I wish you all a safe and Happy 4th
of July!
The concern I expressed regarding yesterday huge gap seemed
to be shared by the majority of the market producing a pop and drop pattern on
the day. Although the SP-500 inked a new
record high the price action left behind more question than answers about the
path ahead. Asian markets closed mixed
overnight as Australia’s Central Bank cuts interest rates. European markets are flat to ever so slightly
bullish this morning as the world looks for more details and clarity on
US/China negotiations.
US Futures are currently flat to slightly lower this morning
with very little to react to on both the Earnings and Economic calendars. Baring a market-moving news report don’t be
surprised to light and choppy price action today with rapidly declining volume
as traders head out to celebrate the 4th of July. There is a chance that condition lasts for
the rest of the week. Keep in mind the
market closes at 1:00 PM Eastern on Wednesday.
On the Calendar
On the Tuesday Earnings Calendar we have 14 companies
reporting quarterly results. Among the
notable reports AYI, JEF & SMPL.
Action Plan
It would seem my question about what had changed to create yesterdays
huge gap up was shared by most of the market after printing pop and drop
patterns on all major indexes. Although
were was a late day rally to lift the indexes off the day’s lows yesterdays price
action leaves more questions than answers to the path ahead. Further complicating the issue is the growing
Iranian tensions, and the will they or won’t they question regarding interest
rate cuts.
With little for the market to respond to today on the Economic
Calendar and Earnings Calendar as well as the coming holiday futures are suggesting
a flat to modestly lower open this morning.
As I suspect many traders have already headed out to take advantage of some
holiday vacation time don’t be surprised to see some very light choppy price
action today will low volume. It will
not be a surprise if this problem persists the rest of the trading week.
The bulls are in beast mode this morning after the US and
China agreed to a cease-fire and agreed to resume negotiations. Looking at the futures this morning one might
assume the tariff war is over but as of now there is still no clear path to a
deal and current tariffs will remain in place.
The good news is there was no escalation in the rift between the countries.
Asian markets closed mixed but mostly higher on the G20 developments and European markets are currently sharply higher this morning. US Futures currently indicate a soaring gap up that will likely set new record highs and punish any traders caught short. Keep in mind with the market closing early Wednesday for the holiday volume will likely begin to decline sharply over the next 2-days as traders head out to celebrate. It is entirely possible the biggest price move of the day will be the gap so be careful not to chase.
On the Calendar
On Monday’s Earnings Calendar we have 14 companies reporting
results but none are particularly notable.
Action Plan
Tariffs remain in place but the US and China have agreed to
come back to the negotiations table. The
President also agreed to ease restrictions American companies from selling products
to Huawei. Chetan Ahya, global head of
economics describes the meeting results as “an uncertain pause”, with no clear
path to a deal. However, the bulls are
celebrating the meeting results of the meeting this morning and the futures are
flying high.
I would expect new record highs this morning and anyone
caught short will likely be squeezed out this morning. Unfortunately the biggest price move of the day
may be the gap so be very careful not to get caught up in the excitement and
chase into the open. Let’s keep in mind
that the market will close early on Wednesday in observation of the 4th
of July holiday. That means volume is likely
to begin dropping as traders head out early to celebrate.
With the big meeting between the US and China presidents on Saturday
it would seem that anything is possible by Monday morning. Will they or won’t they? The hope of a deal seems to remain remarkable
high as the bulls once again show strength in the morning futures. Asian markets closed lower across the board
overnight but European markets are all cautiously higher ahead of the G20.
Even the beleaguered IWM managed to join the DIA, SPY and
QQQ yesterday by closing just above its 50-day average. Although the futures suggest a modest gap up
this morning we must be very careful and thoughtful of the potential risk of
this weekend. I don’t know about anyone
else but I will avoid adding additional risk ahead of this weekend and will likely
reduce my current holdings to protect my capital from the unknown.
On the Calendar
On the Friday Earnings calendar we only have 13 companies
reporting their results. Among the notable
are STZ & KHC.
Action Plan
The bulls remain very tenacious this morning even after
learning that next quarter earnings are expected to flat. One must wonder how we can remain near
all-time highs without earnings growth. Possible
rate cuts will certainly help and of course a trade deal with China would be a
game changer but those are still some big unknowns. It seems a lot would have to go exactly right
which makes me wonder if we’re coming close to pricing the market to
perfection. Only time will tell.
Technically speaking the current trend is up and the bulls are
in control with the Futures pointing to a bullish open. Remember the potential market volatility in
reaction to the G20 meeting results after the president meets to discuss trade
relations with China. Plan your risk carefully
heading into the weekend keeping in mind the holiday week that follows. Have a wonderful weekend everyone!
Let’s all hope cooler heads prevail or the 4th of
July shortened trading week could create some wild fireworks in price action volatility. Futures markets have currently recovered since
the report and now suggest a relatively flat open. However, it would be wise to consider the
risk of this coming weekend and carefully plan how you can protect your capital
given the price volatility that may result.
Early this morning the Wall Street Journal report seems to
have upset the apple cart quickly reversing futures markets that had held
positive all night. If the report is
correct the list of demands that Chinese President XI Jinping will present to
President Trump at the G20 seems only to inflame trade war tensions and diminish
the odds of a deal.
On the Calendar
On the Earnings Calendar we have nearly 40 companies reporting
results today. Notable earnings include CAN,
CAG, JEF, MKC, NKE & WBA.
Action Plan
US Futures held positive most the night until but quickly
reversed negative after the Wall Street Journal reported that Chinese President
Xi Jinping will present a list of demands to resolve the trade war to President
Trump at the G20 meeting. If the report
is correct it would seem the odds of a deal at the G20 decline to zero. Let’s us all hope it’s not true or we are likely
to face another round of tariff increases.
Other troubling news for the Dow Futures is the BA has
reported it found another software problem in their grounded aircraft. BA is indicated to gap more than 4% lower at the
open today. As you plan your risk for
the weekend ahead consider the volatility that could result from the G20 developments
and the 4th of July holiday the following week. It would seem to be a near impossibility to hold
on to a trading edge heading into this weekend.
The tenacious bulls pushed the market to new record highs with
a glass half full attitude that the FOMC would give them a bigger rate cut than
it now seems the Fed is not quite ready to give. Then they grabbed on to a late night headline
from Secretary Munchin that the US/China trade deal is 90% complete reversing afternoons
yesterday bearishness. Finish reading
the story and what Munchin said he hoped for a completed deal by years
end.
If he’s right could mean another six months of negotiations and
market uncertainty. It would seem the
bulls once again see the glass half full.
A trade deal with China would be a game changer but six more months of
news cycle spin and possible tweet storms means the road ahead could be full of
potholes and very challenging to navigate.
The news-driven gap this morning could create a short squeeze but it also
has the potential of a pop and drop pattern.
Stay focused and disciplined to your rules.
On the Calendar
On the hump day Earnings Calendar we have 18 companies
reporting quarterly results today.
Notable reports today include KBH, BB, GIS & PAYX.
Action Plan
After learning that the FOMC plan to move much more
cautiously than the somewhat exuberant market has expected the short-term price
action turned decidedly bearish yesterday afternoon. No doubt many likely entered short positions yesterday
expecting at a modest pullback at a minimum.
However, during the night we get a statement from Treasury Secretary
Mnuchin that the trade deal is 90% complete and markets around the world reacted
bullishly.
Had they gone beyond the headline they would have also seen
the statement that he hoped a completed deal by the end of the year. If it’s going to take another 6-months to work
out the final 10%, I think it’s safe to say the devil is in the details and we may
still have a long bumpy road ahead. US
Futures are pointing to a gap up of around 100 Dow points. Truly a
glass half full kind of market. Those
caught short will be squeezed hard this morning and could propel the indexes
higher. On the other hand the morning
pop could set up a pop and drop pattern so be patient to see if buyers will
support the gap.
Taking a break ahead of more Fed speak as Jerome Powell speaks with the New York Times at 1:00 PM Eastern today. Some are speculating that he may try to reduce the current market exuberance of expected rate cuts. Certainly this adds some uncertainty to the day as if we didn’t already have enough of that with growing Iranian tensions and a pending G20 with US/China trade hanging in the balance.
Asian markets closed lower across the board during the night
and European markets are modestly lower in reaction to the new US sanctions on
Iran. US Futures are also modestly lower
ahead of a busy economic calendar day and a few noteworthy earnings reports. There is a lot to consider as we plan today amid
the uncertainties but as for now the bulls are firmly in control and I would
not expect them to give up easily.
On the Calendar
On the Tuesday Earnings Calendar we have 21 companies
stepping up to report. Among the notable
reports are MU, FDX, FDS & LEN.
Action Plan
With more Fed speak today and the pending G20 meeting it
would seem the market is taking a wait and see approach. Some are concerned that Jerome Powell may
temper the market’s exuberance over possible rate reductions in his interview
with the New York Times at 1:00 PM Eastern today. Of course what he will say and how the market
will react only time will tell but should be a consideration as trader plan how
to approach the market today.
Technically speaking a little resting consolidation after
such a big move this month seems logical even without pending uncertainty. The bulls are in control and unless the Fed
changes the market’s perception I don’t see that changing. While a pullback may be in the card for the
near future, a hold above the 50-day averages builds a bullish case.
With high hopes of future rate cuts and fingers crossed for a
G20 trade deal to end the trade war, trade and investors push the SP-500 to new
record highs. Now with tensions rising with
Iran the question becomes can the other indexes follow suit and carve out new
records as the weekend approaches. Although
it seems very likely at this point that the markets desire new highs we should
not rule out the possibility of some profit-taking to reduce weekend risk.
Asian markets closed mixed but mostly lower overnight and
European markets are now modestly higher.
US futures that were lower all night have been creeping up all morning trying
to put on a brave face before the open an ahead of the Existing Home Sales report
expected at 10 AM Eastern. As we head
into the weekend I’m not sure possible reward is worth the risk of adding new
positions today.
On the Calendar
On Friday’s earnings calendar we have three companies reporting
quarterly results with only KMX notable.
Action Plan
Futures are taking a little rest this morning after the
SP-500 closed at new record highs on the hope of future rate cuts. The DIA had a new closing high record and
came very close to printing an all-time high for the index while the QQQ and
IWM lag. According to reports the President
had authorized retaliatory air strikes against Iran for the shooting down of a
drown over international air space.
However, the strike was called off but tensions continue to escalate.
After such a huge run-up in prices, mounting Iran tensions,
the G20 just around the corner with hopes of a trade deal and facing a weekend
buying new positions could be very difficult for traders. In fact there could be some profit-taking
emerge to lower weekend risk as we move through the day. Currently future are pointing to flat or
modestly lower open. I still think the
market will seek out new record highs in the DIA and QQQ in the near future but
I’m not sure the potential reward is worth the risk heading into the weekend.
Due to a computer problem there is no morning note or written blog. However, I was able to finish the Morning Market Prep Video and you can access it with button below.
All eyes are on the FOMC decision & forecast. Will they, won’t they, how much or how little
will they do to stimulate the economy?
Certainly the market has rallied significantly with the hope of rate
cuts. Will the Fed do enough to support such
strong anticipation or will they disappoint the market? It’s a tough call as US economic data
continues to show strength and the market is nearing a test of all-time
highs. What they do will not be nearly
as important to traders than how the market reacts to the news. Pop some popcorn the show is about to begin.
Asian markets closed higher overnight as they reacted to the
positive US/China trade developments. Negotiations
will resume and leaders will meet at the G20 attempting to find a compromise to
the current trade war. European markets
as well as the US Futures are rather subdued this morning as the world waits
for the FOMC decision on interest rates and their future forecast. It would be normal to expect light and choppy
price action as the market waits but at 2 PM Eastern anything is possible as
the market reacts. Plan your risk carefully.
On the Calendar
On the hump day Earnings Calendar we have only 11 companies
reporting quarterly earnings. Notable
reports include ORCL, SCS & WGO.
Action Plan
After yesterday’s 350 point Dow rally and facing the FOMC
rate decision one wonders if there will be anything to do until after 2 PM
Eastern today. Of course the wording in
the FOMC statement will be very important but I believe the market will be most
interested in the forecast and the possibility of not just one rate cut this
year. Expect choppy price action as the
market waits for the decision and then anything is possible as the market digests
the statement, forecast and press conference.
An apparent successful phone conversation with the President
and Chinese Leader raised hopes a forthcoming trade deal after confirmation they
will meet at the G20 to discuss trade.
Although many are saying the offs of a deal at the G20 is very slim the
market seems to be very hopeful a compromise is possible. Never say never but I wonder if a US/China
deal occurs will the FOMC see a need to lower rates? Only time will tell.
