Don’t make the mistake of Chasing.
After a six-day winning streak, the futures are currently suggesting a moderate gap up at the open today. The market has given us a great week of profits, but we don’t make the mistake of chasing this late into the rally and just ahead of the weekend. As the indexes approach important resistance levels, I’m much more inclined to capture gains rather than add new risk as we enter the weekend.
As a matter of fact, members watch as I took profits yesterday afternoon as the market continued to power higher capturing gains that many would have to work a month to earn in a regular job. The point is don’t allow greed to prevent you from taking a profit and doing your job as a trader. Remember quality trades are much more important than quantity.
On the Calendar
The Friday Economic Calendar gets going at 8:30 AM Eastern with a Fed Speaker and the Import-Export Prices report. Forecasters expect imports to rise 0.5 percent in April while Export prices will grow by 0.3 percent. AT 10:00 AM consensus expects Consumer Sentiment to tick higher in April with a strong reading of 99.0. Last but not least is the Baker-Hughes Rig Count at 1:00 AM which is not expected to move the market.
On the Earnings Calendar, there is a big drop in the number of reports with only 43 companies ready to fess up today. Next Monday and Tuesday are pretty big days with around 400 points between them but after that 2nd earnings season begins to wind down.
Action Plan
Yesterday the Dow and SPY showed considerable strength pushing higher after breaking above the 50-day average just the day before. The QQQ’s powered higher as the IWM nears the all-time highs for the average. As I write this, the futures are suggesting a gap up open which will make the seven straight days of gain is the DIA, SPY, and QQQ. If you’re not already long, I would now caution you not to chase as we are nearing significant levels in the indexes.
It’s been a great week of gains I will be more focused mostly on taking profit as we head into the weekend. The big challenge for the market now is to prove the bulls are strong enough to hold these key levels of support. The bulls are in control and could most certainly push hard enough to close the week with 7-straight days of gains, but it would also not be that surprising to see profit taking ahead of the weekend. Keep in mind gap up opens can easily be seen as an opportunity to sell into strength to capture gains. I wish you all a great day and a fantastic weekend.
Trade Wisely,
Doug
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