Choppy price action continues.  Will the consumer break the tie?

Choppy price action is very difficult for all traders to manage.  This week I have been warning of the dangers of being overly long the market when resistance has been so difficult to breach.  So far we have been lucky that the Bulls and Bears have remained equally matched.  The tie breaker could be today when we get a read on the strength of the consumer.  I think it would be wise to prepare plans for both a break of resistance and support.  Because we have been in such a tight range for so long, pressure continues to build and price move on any break could be substantial.  Be prepared!

On the Calendar

Today on the Economic Calendar we have the Consumer Price Index and Retail Sales reports at 8:30 AM Eastern time.  I think both of these numbers will be of utmost importance and will likely set the direction for the market.  At 10:00 AM we get a reading on Business Inventories and Consumer Sentiment.  So far every single day this week there have been Fed speakers and Friday will be no different with three speakers.  On the Economic Calendar, there are only 60 companies reporting, but that is not an excuse to stop checking.  It only takes one report like SNAP to destroy a traders progress.  Always find out when a company reports and have a plan to protect your capital.

Action Plan

I need to be a flexible this morning and have a couple of plans prepared.   I”m think today will hinge on the strength of the consumer.  With the overall market chopping sideways at resistance the Retail Sales numbers could easily be the deciding factor on direction.  As a result to be prepared with a couple of plans.

If the numbers are really good and the market reacts positively, I want to prepare for a potential upside breakout.  If this occurs will want to hang on to existing positions and even look for new trades that are set up.  Toward the end of the day, I will have to make decisions on individual positions; take profits, or hold through the weekend.

If the numbers show weakness in the consumer, the market will likely react negatively.  With price support so close it could easily give way allowing the market to tumble lower.  In that event, I want to be ready and willing to close profitable positions and protect capital on trades losing money.  Obviously, a negative close below support could lead to more selling early next week.  Consequently, I would want to go into the weekend with less exposure to the market.

Trade Wisely,

Doug