Let’s go Bulls!

With the Bulls solid performance on Friday and current futures pointing more bullishness this morning, I want to cheer them on with a, Let’s go Bulls!  Currently, the futures suggest that that the QQQ will join the SPY and IWM this morning breaking to new record highs.  I’m all for that, and of course, will enjoy the profits of the bullish price action and will always hope for more.

However, if I put my feet back on the ground and look at the chart critically, I also have to recognize that a breakout of resistance is only valid if the bulls can prove to hold it as support.  So as wonderful as it is to see new records being set we have to remember that is only half the battle.  That means I must still stay focused in on price action watching for clues of a bear attack.  If you have traded very long, you have heard the phrase, “pop, and drop.”  New market highs with a gap up are the perfect set up for that nasty phrase to become a reality.  So let’s cheer for the Bulls but keep in mind even when the Bears seem hidden they are always there and always hungry!

On the Calendar

The Monday Economic Calendar begins with the Chicago Fed National Activity Index @ 8:30 AM Eastern.  The Dallas Fed Mfg. Survey follows @ 10:30 AM with four bond events between 11:00 AM and 1:00 PM.  None of today’s reports would be expected to move the market.

The Economic Calendar shows 24 companies expected to report today.  Before the bell, KLXI and USAT are among those reporting with HEI being the most notable after the bell.

Action Plan

Friday’s nice broad market rally saw the SPY and IWM both close at new record highs and the QQQ just a quarter point below a record high breakout.  Even the DIA got into the game, breaking above the March high holding that level through the close of the day.  Keep in mind that the Dow has a lot of catching up to do and still more than 800 points below the January high.  Overnight Asian markets were solidly bullish across the board.  European markets are currently also bullish this morning holding gains across their major indexes.  Consequently, US Futures are pointing to follow through bullishness this morning with the QQQ currently indicating a gap to new all-time highs.

The Bulls seem very much large, and in charge, but remember breaking through to new record highs is just half the battle.  Now it’s important that the Bulls prove they can hold on to this new level as support!  As you plan your day try not to get caught up in morning hype and chase into trades well within there rally.  We want to buy stocks at or near price support.  Keep a critical eye on price action and keep in mind that a gap up to new record highs is the perfect set up for a whipsaw if the bulls are unable to support the gap.  Let’s go bulls!

Trade Wisely,

Doug