New Tariffs

With new tariffs likely to be levied by the US, China, and Europe it seems that the Bear’s are ready to go back to work this morning.  Currently, the Dow futures are pointing to more than a 100 point gap down at the open.  With the QQQ and the IWM closing at new record highs yesterday its easy for the trader to feel a bit cheated with an overnight change in attitude like this.  We all hate the feeling of helplessness and being out of control.

The best way to deal with that is always to be taking profits.  It’s normal to want the maximum profit possible out of every trade, but that is allowing greed to get in the way of good decision making.  If you’re walking down the street and a hundred dollar bill blows across the sidewalk in front of you, most will stop and pick it up.  Right?  Why don’t we do that in trading?  Taking partial profits along the way puts you in control and makes overnight reversals much easier to handle.

On the Calendar

The Economic Calendar kicks off at 8:30 AM Eastern with the Empire State Mfg. Survey.  Consensus suggests a reading of 19.1 in June vs. Mays’s 20.1 reading with new orders remaining strong.  The 9:15 AM Industrial Production expects an increase of 0.1 percent and capacity utilization should hold steady at 79.0 percent according to forecasters.  At 10:00 AM Consumer Sentiment expects an increase to 98.5 in June vs. the already strong May reading of 98.0.  Wrapping up the potential market-moving reports for the week is reading on Treasury International Capital 4:00 PM which tracks financial instruments in and out of the US.  There is the Baker-Hughes Rig Count at 1:00 PM and a Fed Speaker at 1:30 PM but are not expected to move the market.

On the Earnings Calendar, we have a very light day with only nine companies reporting.

Action Plan

Yesterday was a day of missed signals with the QQQ’s and IWM closing at new record highs while the DIA found more sellers than buyers and the SPY chopped in consolidation.  Overall with up trends holding there was the reason for caution, but the Bulls maintained their dominance.  Ths morning however with the news that the President is likely to levy tariffs against China today futures are pointing to a sharply lower open with the Dow gapping down triple digits.  Of course, China has promised immediate retaliation with its own set of tariffs as the so-called trade war heats up.

As always I will be more focused on protecting profits than adding new risk ahead of the weekend.  I wish you all a fantastic weekend.

Trade Wisely,

Doug