Feed the Beast?

Last week the bulls ran like their tails were on fire and their hind ends were catching.  I saw a headline where Cramer said the market is in “Beast Mode.”  Okay, but I think the real question on the mind of most traders, is should they continue to feed the beast?  There is no question that the market seems extended and any reasonable thinking trader suspects a pullback could start at any time.  However, price action currently has no hint of stopping just yet.  We all know that predicting is unproductive as it could put you on the wrong side of the market or have you missing out on the best bull run of the year.  My suggestion is to say with the trend taking profits along the way and focus on price action for clues of a change.  Take only low-risk entries when adding risk and avoid chasing of any kind.  The trend is our friend, stay with it until it ends.

On the Calendar

Monday’s Economic Calendar seems focused on kicking off an FOMC speaking tour.  The is one before the market opens, one at 12:40 and another at 1:35.  We have a couple of small reports that are likely to go unnoticed by that market as well as two bond auctions to round out the day.

There are 11 companies on the Earnings Calendar expected to report day.  Although there are a couple of bigger companies, I would not expect any of them to be market moving.  Keep in mind earnings season officially kicks off on Friday with reports from Blackrock, PNC, JPM, and WFC.

Action Plan

The futures markets opened yesterday positively and have managed to maintain that sentiment all night.  New record high closes across all four of the major indexes as the bears seem to have gone into hibernation.  The Consumer Electronics Show kicked off last night with the CEO of NVDA as the keynote.  NVDA shares are indicated higher this morning and could make an all-time high.  The INTC CEO speaks this evening with most thinking they will extinguish the recent chip rumors.

Tech could be a driving force for the first part of this week due to the new coming out of CES, but it will quickly shift to the beginning of earnings season that officially kicks off on Friday.  As always I will continue to trade with the trend and focused on price action.  Having moved up so strongly last week, it would not be out of the question to see the market rest so watch closely for price action clues.  Also, remember gap up opens to new market highs can produce whipsaws and reversals so don’t chase.

Trade Wisely,

Doug