Earnings continue propelling prices higher.
So far 3rd quarter earnings reports have impressed the Bulls and punished Bears that were betting against the rally. The very impressive results from AAPL earnings continue propelling prices higher in the pre-market with yet another gap up open. Stay with the trend but always keep in mind at some point there will be profit taking. Make sure not to get caught up in the hype, drama, and greed. Have a plan to capture gains if and when the Bears show their teeth.
On the Calendar
The Economic Calendar gets going with the ADP Employment Report at 8:15 AM Eastern. ADP seems to have lost its mojo over the last several months missing the actual employment numbers significantly. If this continues and they don’t adjust their metric soon, I suspect it will become a largely ignored report by the market. Currently, the consensus for the Friday number stands at 173K. At 10:00 we get the EIA Petroleum Status Report which has been trending lower and helping to support the price of oil. Let’s hope that trend continues today. After that, we have a two Fed speakers at 11:00 AM and 3:30 PM.
Another very big day on the Earnings Calendar with more than 400 companies reporting. So far earnings have provided the fuel for this impressive market rally, and that looks to continue today after the impressive results from AAPL. Please make sure to check reporting dates of companies that could affect you and your portfolio!
Action Plan
Another day and another record for the DIA gapping up the 2nd day in a row and holding the gap through the close of the day. Very impressive display of bullishness indeed! The QQQ, SPY, and IWM closed the day with muted results, but all in all held up very well considering the overall duration of this current rally. The futures are pointing to another gap up this morning on the back of the AAPL earnings report. The tech rich QQQ’s should see a nice pop above resistance today.
With the market gapping up for the 3rd day in a row I will once again focus closely on the price action for the first 20 to 30 minutes looking for signs that real buyers are supporting price. I will continue to trade with the trend looking for long positions. Because the rally is very extended, I feel the need to focus more on protecting profits and locking in current gains. I am not predicting a profit taking slump in the market. However, I do want to be prepared with a plan if it does occur.
Trade Wisely.
Doug
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