Nine straight days of record highs in Dow.

Who doesn’t love a strong Bull?  Yesterday marked the 9^th straight all time record highs in the Dow.  The question is how long can this last?  Your guess is as good as mine, but we should prepare for the fact it could end at any time.  Please understand I am not saying a selloff is about to begin or even suggest bearishness.  The overall trend is still up and very strong, and there is nothing in charts right now to suggest that is about to change.  I am only warning about the dangers of complacency.  When the market is extremely bullish, it’s easy to forget that danger could be lurking just around the corner.  Continue to trade long and stay long until something changes but always be prepared with a plan to protect yourself.

On the Calendar

Another very light day on the Economic Calendar today.  The only thing of note is the JOLTS report at 10:00 AM Eastern.  JOLTS tracks job openings which moved lower on the last reading to 5.666 million.  Forecasters for this month expect further declines in job openings for a reading near 5.6 million today.  We have a couple of bond auction today but pretty much wraps up the calendar today.  Even the Fed Speakers have the day off today opposite every other day this week.

On the Earnings Calendar, there are nearly 400 companies reporting today.  DIS is considered a bellwether by many market watchers, so it can be a market moving event when the company reports after the bell today.  Lately, the company has seen declines in subscriptions mostly from its ESPN holdings.  Estimates have placed an earnings target of $1.57 a share target for them today.

Action Plan

Nine days straight up on the DIA with the last six gapping to new highs that have been thus far defended by the Bulls.  How much longer this can continue is anyone’s guess, but we should not be surprised to see a pullback or a consolidation begin at any time.  Yesterday the DIA was finally able to inspire the SPY to participate closing at a new record high.  The QQQ’s also moved higher yesterday but fell short of breaking out and remains under price resistance.  IWM continues to struggle and remains not only under resistance but also under the broken trend.  For the first time in over a week, the Dow Futures currently suggesting a flat to slightly lower open today.

I plan to remain slightly cautious this morning and will likely allow 20 to 30 minutes to pass focusing on price action before making any new trade decisions.  I will be watching to see if the Bulls will continue to support current levels with additional buying or if profit taking will finally begin.  Although I believe the DIA, in the short-term, appears overextended, there is currently nothing in the charts indicating that will change.  That fact, however, doesn’t give me the right to be complacent and ignore the possibility that selling could at any time begin.  As a result, I must have a plan to protect gains as well as my trading capital to avoid emotional decision making in the heat of the moment.

Trade Wisely,

Doug