Friday’ relief rally requires follow-through.

It was nice to have a relief rally Friday taking some of the pressure off the market.  However, that is all that it turned out to be because the Bulls lacked the energy to break resistance levels.  I think it is entirely possible that was we saw and Friday was nothing more than a short covering rally short traders captured gains before the weekend.  So today I need to see some follow-through by the Bulls and some proof they are truly there to support price.

Discipline to follow your rules and stick with your plan is very important in this market.  Years ago I would allow times like this to chop my account to pieces trying to trade without a plan and a good set of rule to protect me.  Not only would I see my hard earned capital disappear, but my confidence as a trader would evaporate as well.  I call it Yo-Yo trading and it nearly destroyed me.  Today as a confident and consistently profitable trader I can tell you it’s the plan and the discipline to follow rules that make the difference.  Having a plan and profit or fail to plan and suffer the consequences.  It’s all up to you!

On the Calendar

A light day on the Economic Calendar for this first full week of trading in July.  We have a couple of insignificant economic reports a few bond auctions and a Fed speaker after 11 PM Eastern.  The Earnings Calendar only has 11 companies that are reporting today.  I would not expect any of the earnings reports today to be market moving.

Action Plan

As always my priority will be to manage the positions that I currently hold.  After that, I will be looking for new trades and refining my watchlists.  I will also look for possible short trades particularly if the failure patterns begin to emerge on the index charts near price resistance.  With earnings just around the corner, we could see light volume and choppy price action all week.  Plan accordingly.

Trade Wisely,

Doug