Long-Term Success

Having the discipline to follow a good set of rules is essential to achieving long-term success as a trader.  A rule that has served me very well over the years is to avoid buying stocks at or near price resistance.  That rule directly translates to the overall market as well.  When the indexes are at or near price resistance levels as they are today, it’s very important to exercise some caution.  As we push toward market highs, traders often over-trade loading up on positions very near where failure patterns appear.

Please don’t misunderstand I am not predicting a failure.  I, in fact, want to see the market move higher!  However, a bullish desire must not cloud your view of other possibilities.  As the market approaches resistance, I want to be very focused on price action watching for both bullish and bearish clues.  I want to evaluate my current holdings carefully and weigh the consequences of adding additional risk as an index nears a resistance level.  Remember good trade management starts well before the position becomes part of your portfolio.

On the Calendar

A light day to begin this Monday on Economic Calendar with no market-moving reports expected.  We have three Bond Events between 11:00 & 11:30 AM, the TD Ameritrade IMX @ 12:30 AM and Treasury STRIPS @ 3:00 PM to close the calendar day.

A very big week of earnings reports begins with more than 200 companies results today.  Continue to prepare each day by checking earnings reporting dates against the stocks you own or are considering for purchase.

Action Plan

We closed last week with bulls pushing upward to test price resistance levels of the prior week.  Unfortunately, they were unable to breakthrough giving us a reason to watch price action closely and approach this morning with a bit of caution.  Asian markets were mixed but mostly lower while European markets are choosing to move higher.  Currently, the Dow Futures are pointing to a modestly higher open with a busy Earnings Calander that could easily move it around before the open.

By in large earnings reports continue to roll in mostly positive, but the slide in the FB and NFLX continues to weigh heavily on the mind of the market and dampening enthusiasm.  Last week the bulls proved the ability to defend against the political uncertainty of a US/China trade war.  Now the question is do they have the energy to reclaim price resistance levels and hold them as support.  As we test resistance, be careful not to overtrade and stay focused on price action clues.

Tade Wisely,

Doug