Focused and Flexible

As we head into the weekend with a strong Employment Situation report expected and the looming threat of 200 billion in tariffs, traders will need to stay very focused and flexible.  The DIA, SPY, and IWM are all holding just above key support levels.  Unfortunately, the QQQ’s failed its key support yesterday, but that can recover quickly if the bulls find something to inspire them.  However, if the bears happen to find inspiration to attack we could see some nasty price action should support fail in the other indexes.

Stay focused on price action watching for head fakes and whipsaws.  I also think it’s important to set aside your bias and remain flexible and prepared.  The market is at a critical decision point, and though I’m cheering for the bulls, it’s unwise to underestimate the bears.  Carefully plan the risk you carry into the weekend.

On the Calendar

The Friday Economic Calendar has only one market-moving report today, but they don’t get much more important than the 8:30 AM Eastern Employment Situation report.  The consensus is expecting a strong August with job creation rising to 195,000 and the unemployment rate falling to 3.8 percent.  Monthly hourly earnings are also expected to increase by 0.3 percent with the year-on-year rate rising to 2.8 percent.  Manufacturing is expected to show a very solid increase of 21,000 and private payrolls rising 190,000.  We have Fed speakers at 8:30, 9:00 & 10:45 AM with the Quarterly Services Survey @ 10:00 AM, the Baker-Hughes Rig Count @ 1:00 PM and Treasury STRIPS closing out the week at 3:00 PM.

On the Earnings Calendar, we have a light day with only 13 companies reporting.  Before the bell, HURC & GCO are among those reporting with MSB and UBA among those reporting after the close.

Action Plan

Yesterday was an interesting day with 3 of the indexes turning lower while the bulls focused their attention on the Dow.  While there were several bear attacks in the Dow creating interday whipsaws, the Bulls found a way to push right back.  Overnight Asian markets were mixed but mostly lower and European markets are currently lower across the board.  Consequently, current US Futures are pointing to a lower open but with a strong Employment Situation report expected an hour before the open that could quickly change the open expectation.

The QQQ’s failed at support yesterday, but the DIA, SPY, and IWM managed to hold just above key levels.  With the Employment Situation report and the threat of 200 billion in new tariffs leveled against China, we will have to flexible and focused.  As normal I will be looking to take some profits and reduce risk heading into the weekend.

Trade Wisely,

Doug