Once again Wednesday, markets made a small gap higher only to fade the gap in a small range.  The SPY (by 2 cents) and QQQ (by 16 cents) both eked out new all-time high closes again while the DIA closed down just 0.07% from its own all-time high close.  This action the last two days is certainly a consolidation and it does look a little bit “toppy.”  However, the trend remains bullish and breadth continues with T2122 now at 84.39, which is barely in overbought territory.

After hours MU beat estimates on both the top and bottom lines.  It also reported that it had now received all required licenses for supplying Huawei. This had been a massive overhang for MU, because the Chinese company is Micron’s largest customer.

Also, a federal appeals court ruled in favor of a petition supported by the Trump Administration.  They told a lower court that the “individual mandate” of the Affordable Care Act (Obamacare) was unconstitutional.  However, instead of striking down the entire law themselves, they ordered the original lower court to consider whether or not the whole Act, including coverage for pre-existing conditions, should be killed.  This “half a loaf” ruling virtually guarantees the case will be appealed to the Supreme Court (maybe by both sides) and is unlikely to be decided before the 2020 election.  In turn, this also means Healthcare and Health Insurance will be political hot topics again and that the longer-term Insurance industry outlook is likely to remain in doubt for at least another year.

However, the biggest overnight news story was impeachment.  After another day of alternate narrative (reality?), the House voted to impeach President Trump on both counts (Abuse of Power and Obstructing Congress).  The next step will be to send the indictments to the Senate for trial.  Luckily for the President, Republicans have flat out stated they don’t intend to conduct a fair trial (as constitutionally mandated).  Instead, they say they intend to simply acquit the President of all charges. And they have plenty of votes to do just that since conviction requires a supermajority. To me, the interesting question will be Chief Justice Robert’s (who will preside) position on the Senate process and the idea of declaring a verdict before the charges or evidence is even delivered.

Thursday’s major economic news includes Weekly Jobless Claims and the Dec. Philly Fed Mfg. Index (both at 8:30 am) and Nov. Existing Home Sales (10 am).  Earnings before the open include ACN (beat on both lines), CAG (beat on both lines), and DRI (beat on earnings, missed on revenue).  Meanwhile, NKE reports after the close.

Overnight, Asian markets were all slightly in the red.  In Europe, markets are mixed at this point.  And as of 7:30 am, U.S. futures are pointing toward another slight gap higher of between 1/10^th and 1/4^th percent.

With Fed rates on pause (and heavy QE underway), a phase one Trade Deal in hand, and earnings out of the way, there doesn’t seem to be many obstacles in the bull’s path.  Despite this, the rally has been on pause for a couple of days on consolidation.  All we can do is continue to trade the chart we get and focus on the swings.  So, continue to work the cliché…plan your trades, and trade your plans.  Keep taking profits without being too greedy, move your stops to protect yourself and wait for the trade to come to you (don’t chase).   

Ed

Swing Trade Ideas for your watchlist and consideration: NEO, PINC, THO, SKX, TWTR, CREE, SPLK, DXC, WCG, VXX. Trade smart, take profits along the way and trade your plan. 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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