Mixed price action signals and emotion cloud the view forward.

Mixed price action signals coupled with the drama of a huge earnings day could make for a bumpy day.  Over the last few days, the Bulls have made a strong statement smashing through downtrends and resistance levels.  As a result, most traders have an upside bias.  However, the shooting star candle pattern that appeared yesterday on the DIA and SPY raises the flag up uncertainty.

Today we have a huge number of companies reporting earnings.  The question will there be enough positive reports to support current price levels.  There are currently more companies with prices above $100 a share than ever before.  As long as companies continue to perform that is not a problem but if too many show signs of stress at this altitude there could be trouble ahead.

The last thing I want to do is predict which side will prevail, Bulls or Bears.  I want to avoid all the noise stay focused on the price action making the trades come to me.  Flexibility and the willingness move with the market no matter the direction is critical.  The price action of the market is always talking to us and leaving behind clues.  The question is are you listening to and willing to see the clues or has your bias plugged your ears and fogged your vision.

On the Calendar

Today on the Economic Calendar we have three potential market moving reports at 8:30 AM eastern.  The Durable Goods and International Trade numbers being most important with Weekly Jobless Claims to follow.  Overshadowing the economic numbers today will be our first big day of earnings reports this season.  With 477 companies reporting, plan for an extra dose of volatility today.  Also, we must remember that Congress is moving forward on the new health care bill.  Any news surrounding this controversial subject has potential market moving effects, plan accordingly.

Action Plan

My plan today calls for flexibility and a keen focus on price action.  With the barrage of earnings announcements and news spun from DC anything is possible.  With the DIA, SPY, and IWM tucked tightly against important resistance levels fast and extreme price moves are not out of the question.  As a result, I don’t approach the market today with a bullish or bearish bias.  I want to be prepared to react to price action clues without the fog of bias clouding my focus.

Trade wisely,

Doug