Dow 25,000?

The bulls appear to have limitless energy to drive the market higher.  Is Dow 25,000 in the cards?  With Congress likely passing the Tax Reform bill today and the VIX indicating No Fear it certainly seems possible.  Exciting, yes, but let’s not get too overconfident or complacent.  Let’s remember we are still facing a government closure this weekend unless Congress can get their act together and pass a budget.  A failure to do so would likely send shock waves through the market so stay focused on price and have a plan if the tide starts to go out.  It would also be wise as you plan the rest of the week that volumes may quickly begin to decline as traders take off for Christmas.  A trade may look perfect, but without volume, it can’t move and do you want to be holding a lot of open positions over the holiday.  Something to ponder as you look ahead and assess the risk.

On the Calendar

Tuesdays Economic Calendar kicks off at 8:30 AM Eastern with the Housing Starts Report.  October saw a sharp acceleration with starts up 13.7% with permits up 7.4%.  Forecasters expect November to moderate with starts coming in at 1.240 million annualized vs. 1.290.  Permits pullback slightly to 1.270 million annualized vs. 1.316 in October.  After that, we have a couple of reports unlikely to move the market, a bond auction, and a Fed speaker at 1:10 PM.

On the Earnings Calendar, we have just over 30 companies reporting today.  After the bell, a couple of earnings report to take note of is RHT and MU.  Continue to reinforce the good habit of checking earnings dates on the stocks you own or are thinking about buying.

Action Plan

New closing record highs across the board on the major indexes yesterday.  If I heard it correctly, the Dow has amassed 85 new records so far this year.  What an amazing year!  While the markets continue marching higher, the VIX is once again testing historical lows.  Fear of a market correction at least for now is not at all on the mind of traders and investors.  The Tax Reform bill is likely to pass today, and then Congress has to deal with the pending government closure coming this weekend.  We could see some volatility due to the D.C. news cycle as a result so stay on your toes.  Complacency is dangerous!

As of now, the futures are pointing to a small gap up open.  At the open, the Dow will likely be less than 150 points from a 25000 print.  Can the bulls get it done this week?  We have some bigger earnings reports after the bell today that could certainly help if they report well.  As for me I will continue to trade long positions with the overall trend and will continue to look for new trading opportunities.  However, I will also need to keep in mind that volumes could quickly begin to diminish as Christmas draws near.   Plan accordingly.

Trade Wisely,

Doug