Bears in a Hurt Locker

The Bulls executed a perfect blitz yesterday, overwhelming the Bears and putting them in a hurt locker.  For those of us that stayed with the trend, the rewards were fantastic and a reminder to avoid predicting a top.  We had new Record High Closes on all the major indexes as this historic bull run continues.  Today after the early morning rush I’m expecting the volume to drop off dramatically for 2-reasons.  First, traders will extend the holiday and today will be the big get-away-day.  Secondly, we have the FOMC minutes coming out this afternoon, and price action normally gets light and choppy ahead of the release.  I won’t totally close the door, but I will say it’s highly unlikely that I will add any new positions today.  In fact, I will look for profit taking opportunities to reduce risk ahead of the holiday.

On the Calendar

The Wednesday Economic Calendar is a busy one with several potential market-moving reports.  8:30 AM Eastern, Durable Good Orders – Consensus expects a 0.4% increase in durable good orders, take out transportation the number rises to 0.5%.  The core capital goods are expected to increase by a very healthy 0.5%.  Also at 8:30 is the weekly jobless claims that forecasters see rising from 240K to 249K largely due to Puerto Rico hurricane victims.  Consumer Sentiment comes out at 10:00 AM and is seen remaining historically high at 98.1.   10:30 AM brings the EIA oil status report which has been showing supply increases as demand declines.  Finally at 2:00 PM, the FOMC Minutes, rounds out the day.

We only have just over 30 companies reporting today but keep an eye on DE as it reports before the bell and could easily move the Dow index.

Action Plan

New records for all of the 4-major indexes as the Bulls squeezed early short traders into covering trades.  I must admit I was tempted to put on some short trades last week, but after a close look at the charts I stuck to my rules and stayed with the trend.  As a result, Right Way Options members took several very nice profits yesterday.  As of right now, the Futures are suggesting more bullishness at the open with Dow gaping higher about 30 points.  Of course, all the economic news and earnings reports could extend or erode the morning sentiment.

As per the plan, I have taken profits this week thus lowering my risk as we head into the holiday.  Honestly, there is not a thing wrong with the charts.  The trend is still very much intact but anything is possible, and I want to enjoy the holiday knowing a large portion of my capital is safely tucked in.  Of course, I will continue to hold a few positions, and long-term holdings will not change.

Trade Wisely and Happy Thanksgiving!

Doug