More Questions than Answers!
The light volume choppy rally yesterday was ultimately unable to hold onto gains by the end of the day leaving more questions than answers. There were noticeably fewer companies moving up supporting the rally. There is nothing in the charts that’s particularly bearish, but I do think there is a reason to be a little cautious as we head into the weekend.
It’s not surprising that the Futures are suggesting a lower open this morning but keep in mind this is the last trading day of the quarter, and some intentional window dressing is not out of the question. However, if by chance the bears have the strength to follow through with some downside pressure we could see some quick selling if trends and support levels begin to fail. Set aside your bias focus on price action. Remember anything can happen over the weekend so plan the carefully the risk you carry into the weekend.
On the Calendar
Friday has three potential market-moving reports on the Economic Calendar. At 8:30 AM Eastern Personal Income and Outlays expect to show a personal income increase of 0.4 percent in August while personal spending rose just 0.3 percent. Then at 9:45 AM the Chicago PMI is expected to indicate steady strength with a consensus of 62.3 reading in August. The Consumer Sentiment consensus at 10:00 AM to remain very strong with an expectation of a 110.8 reading in September. We have the Baker-Hughes Rig Count @ 1:00 PM and a Fed speaker after the bell at 4:45 PM to end the 3rd quarter calendar.
On the Earnings Calendar, we have 15 companies reporting today. MTN, reporting before the bell is the most notable report today.
Action Plan
After what seemed to be a relentless light volume push higher during the day the bulls found themselves unable to hold the advance into the close. The indexes left behind less than confident candle pattern on the DIA, and SPY while the IWM largely rested. The QQQ was the only index suggesting much bullishness at the end of the day holding on to the majority of the days gain by the close. Asian markets ended the week on a high note closing higher across the board, but European markets are just the opposite seeing red across the board.
Consequently, it’s on a big surprise to see the US Futures pointing to a lower open this morning. With this being the last trading day of the 3rd quarter don’t rule out the possibility of window dressing allowing the big funds the ability to wrap up the quarter strong. However, if the bears are able to mount a sustained attack, keep an eye on trends and support levels. If they hold as support, we can go into the weekend without much worry, but if levels begin to fail, we could see some quick selling to reduce weekend risk. Have a wonderful weekend everyone!
Trade Wisely,
Doug
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