Playing nice with each other.

The Bulls appear ready to leap the fence this morning gaping the Dow sharply higher with the other indexes following suit.  The media labeled, Trade War, was apparently called off as China and US officials playing nice with each other.  Big surprise, mutually assured destruction of economies was never the goal!

Although the market looks to open higher across the board, they still have significant levels of resistance to deal with just above.  The Bulls may have the inspiration to leap higher, but the question is do they have the energy to break through resistance.  Keep that in mind as you plan your trading day and be careful not to chase entries into resistance.

On the Calendar

The Economic Calendar has a full day scheduled for the Monday, but none of the reports are likely to move the market.  The Chicago Fed National Activity Index at 8:30 AM, 3-bond reports, and Fed Speakers at 11:30 Am, 2:15 PM, and 5:30 PM.

On the Earnings Calendar, we have 48 companies fessing up to their quarterly results.  Although earnings season is winding down, traders must always be aware of the earnings reports on companies you hold or at thinking of buying.  Failure to do so can lead to a very expensive lesson in planning and preparation.

Action Plan

News over the weekend that the US and China will play nice with each other and earnestly work to avoid a so-called Trade War has the bulls fired up this morning.  After only four days of consolidation, the Dow looks as if its ready to trade another run at 25,000.  Currently, the Dow Futures are indicating a gap up of more than 200 points with the other indexes leaping as well.

As exciting as it is to see the bulls inspired higher be careful not to chase and enter trades at price resistance.  Make the market and the stock you are considering for purchase prove they can not only breach resistance but hold it as support.  Years ago that was a major problem for me, and it cost me a lot of money and time.  I would get caught up in the morning hype, leap in with both feet and later realize I had entered positions almost exactly at the point of a pullback.  A pain lesion I hope you don’t have to learn the hard way as it did.

We should have some very nice profits this morning on our long positions.  Our two short positions that are holding some very nice gains will likely give back some of the gains, but as of now, the trade patterns are still valid if you choose to hold.

Trade Wisely,

Doug