Markets gapped higher again Friday. However, they sold off steadily the remainder of the day (perhaps to avoid weekend headline risk). While we closed up off the lows (and frankly still very near all-time highs), the SPY lost 0.29%, the DIA lost 0.46% and the QQQ lost 0.26%. All three of the major indices printed Bearish Engulfing signals but did not fall back into the recent trading range that we broke out of Thursday. Interestingly, the VXX fell again as well, to 14.12. The T2122 also fell but remains in the mid-range at 44.62.
In a follow-up to last week’s main story, Iranians (mostly students) are protesting their own government after Iran publicly accepted the blame for shooting down the Ukrainian Passenger Jet. Those protests turned violent overnight. President Trump made statements in support of the protesters and veiled threats against Iran cracking down on the protests. He also threatened Iraq, saying they would lose their account at the New York Fed Bank if US troops are forced to leave Iraq. (That account is used for processing Iraqi oil sales and to pay their government salaries and contracts.)
This coming week we will see the signing of Phase One of the China trade deal Wednesday (only Vice Premier Li will attend from China, so President Trump may not take that victory lap yet). The impeachment “trial” is also likely to start, if not finish this week.
There is no major economic data or earnings reports on Monday. We’ll also see some more economic data starting Tuesday. Finally, earnings season kicks back into gear again Tuesday with the big banks reporting.
Overnight, Asian markets were mixed, but mostly in all the green. Europe is even more mixed with a split between red and green on their boards so far today. As of 7:45 am, U.S. futures are pointing to a quarter to a third of a percent gap higher at this point.
Overall, markets remain at unprecedented heights and the bulls still control the trend. However, over-extension remains a risk and we are just a day from truly starting a new earnings season. So, all we can do is trade with the trend, look for opportunities, and use hedges. Most importantly, remember to plan your trades, and trade your plans. (Don’t let emotions jerk you around.) Take profits along the way, move your stops to protect yourself, and wait for the trade to come to you.
Swing Trade Ideas for your consideration and watchlist: ZS, ETSY, GRUB, PFE, BMRN, LHX, NIO, FTCH, ANGI, CGC. Trade smart, take profits along the way and trade your plan. Also, don't forget to check for upcoming earnings. The stocks/etfs we mention and talk about are not recommendations to buy or sell.
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