Consolidation enters week #4 as choppy price action continues.

The long the consolidation lasts the bigger the pressure becomes and the possibility of a big fast move.  If the move happens to occur in the overnight or pre-market sessions, a trader can themselves trapped in bad positions.  Although I will continue to trade, I will limit the number and size of the trades as a method of controlling risk.  Discipline to stick to a plan can be difficult to matain during long consolidations.  However, the trader that breaks discipline may quickly find themselves on the wrong side of price when the break occurs.  Please be careful!

On the Calendar

We kick off a this Monday with the Empire State MFG Survey at 8:30 AM Eastern time follow by the Housing Market Index 10:00 AM.   Later today at 4 PM the Treasury International Capital numbers will be released.  These are all important reports, but it’s unlikely they will move the market unless they happen to issue a very big surprise.  I know you will all be shocked, but there are no Fed speakers today on the calendar!  On the Earnings Calendar, we have just over 240 companies reporting today in what looks to be the last mass reporting days this quarter.

Action Plan

As the market remains in a choppy consolidation at resistance, we must remain cautious and flexible and focused.  Cautious, because of the pressure that is building for a big move and no one knows which way.  Flexible, due to the fact we may be required to reverse our trading plans very quickly when a breakout or breakdown occurs.  Focused on price action even though it’s easy to become bored and complacent during a long period of chop.

Futures are pointing to a higher open today, but it would seem we still lack the energy to break out.  Manage the positions you’re in and move slowly to enter new long trades as we bang away at the door of resistance.  Now is the time to be very picky a to cut positions sizes if you do decide to enter new trades.

Trade Wisely,

Doug