The market seemed hesitant Wednesday with a gap down in the SPY and QQQ met by a rally back to flat and ending a bit bullish on the day.  Meanwhile, the DIA and IWM formed DOJI just on the green side of flat.  This leaves us with indecision on the day.  The hope is that the DIA is forming a bottom of a pullback in a bull trend.  However, the IWM looks very toppy with 3 Doji at resistance and neither the SPY or QQQ look very strong.

As expected, earnings continue to be the leading story, with misses by CAT, BA, LLY, and TXN leading the narrative Wednesday.  However, as a whole, earnings continue to be good.  The earnings flood will continue Thursday with perhaps the heaviest day of the season among S&P members.

On the Trade War front, China said they will buy $20bil in US grain within a year AFTER the Phase 1 trade deal is signed.  This would raise the Chinese US grain purchases in 2020 back near the level they were in 2017 before the President’s Trade War.  However, that number has been declining since they bought $25bil in 2014.

Related to Brexit, it appears the EU has agreed they will give the UK an extension.  Most of the 27 other countries agree it should be an extension until the end of January.  However, France is holding out for an extension of just a few days.  Sources tell the European press that the EU will now stall as long as they can to avoid an internal fight and to see what PM Johnson can get passed on his side of the English Channel.  So, no firm decisions in sight yet.

Thursday’s major economic news includes September Durable Goods (8:30 am) and New Home Sales (10 am).  Also, in Germany the economic downturn continues with their Exports down, slower manufacturing output and Industrial Employment dropping the most in almost 10 years.  (Germany is the biggest economy in Europe by far.)  However, as I said, US earnings are likely to drive markets again today. Among that flood were a massive beat by TSLA after the close yesterday and a pre-market miss by TWTR.

Overnight, Asian markets were generally positive, but European markets are strongly green at this point.  As of 7:30 am, U.S. futures were all pointing to gaps higher varying across the major indices.  The QQQ is looking at a 0.7% gap, the DIA 0.3% and the SPY only 0.2%.

Remember to be careful chasing.  If earnings remain strong, this should be a bullish market.  However, in recent months trading has been very news-driven.  So, be sure to use caution, take profits along the way and trade your plans.

Ed

For Your Consideration: These trade ideas for your swing-trading consideration. Long – JBHT, LEN, BF.B, HOME, PNC, IFF, WHR, PKG, GLNG. Short – DRI, HEI, WEC, ZBH, UHS, GD. Trade smart, take profits along the way and trade your trade. Also, do not forget to check for upcoming earnings. Stocks we mention and talk about are not recommendations to buy or sell.

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