Looking for Inspiration

Another day passes with the market looking for inspiration.  We saw the Bulls at work in the QQQ and IWM yesterday with Bears winning the day in DIA and the opposing sides about equally in the SPY.  Overall trends are still bullish as this battle at resistance has yet to reveal a clear directional conviction.  Asian markets closed mixed and European markets currently lean slightly bearish.  Surprisingly the Dow Futures are currently a flat open even as the US and China raise tariffs by another 16-billion.

With the bullish trends still intact, I remain cautiously optimistic but recognize the fact that at any time as bulls and bears battle near resistance that either side could easily gain control.  So as they continue to look for inspiration, I must also be careful not to over trade and closely watch price action for clues.  The old phrase, “hurry up and wait,” seems very appropriate for the current market condition.

On the Calendar

The Jackson Hole Economic Symposium begins today which will likely create a significant number of headlines that could have some market effect.  Weekly Jobless Claims will kick off the Economic Calendar at 8:30 AM which consensus expects a small increase to 215,000.  At 10:00 AM we will get the latest reading on New Home Sales which are expecting a solid increase to 649,000 vs. 631,000 in June.  The Natural Gas Report @ 10;30 AM and the Fed Balance Sheet @ 4:30 indicated as potential market-moving but unless there is a major surprise it’s unlikely.

On the Earnings Calendar, we have nearly 50 companies expected to report results.  Before the bell, we will hear from BABA & HRL with SDSK, GPS, INTU and ROST reporting after the close.

Action Plan

The Bulls showed some tenacity yesterday especially in the QQQs and the IWM indexes.  The SPY made another attempt to break through to record highs however finished the day just below.  The Bears were the most active in Dow with the index slipping 88 points to test the March high as support.  Durning the night futures were slightly weak but once again have managed to rally, currently indicating a flat to slightly bullish open.

All and all the Bulls have maintained control even with lighter than average volume.  With 16-billion in new US tariffs and Beijing immediate retaliation of 16-billion, I’m surprised the market is shrugging it off as if nothing happened.  Once again I would suggest traders use a little caution as we dance around record highs.  Big moves up or down are possible as we consolidate near resistance.  Also, remember head fakes and whipsaws are common near market highs so stay focused on price and plan your risk carefully.

Trade Wisely,

Doug