Pressure to Trade.

Sitting in front of your computer running scans and flipping through charts it’s easy to feel under pressure to trade.  As we sift through charts in a mad dash to find a trade we often fail to remember the condition of the overall market.  Currently, the market is under pressure and is in a short-term downtrend.  None of the major indexes produce a buy signal yesterday, and in fact, they all remained within their downtrends, and nothing changed the cloud of uncertainty that’s weighing on the market.

Patience and discipline are key qualities that all traders must possess.  As your looking for trade-able charts, make sure you are assessing the overall market condition.  Do you have an edge or are you a giving up your edge by forcing trades when the market is not favorable for your positions?  Remember trading is a marathon, not a sprint.

On the Calendar

The Wednesday Economic Calendar gets going with market-moving reports at 8:30 AM Eastern with Durable Goods Orders.  Consensus expects growth in with core capital goods orders increasing a modest 0.2 percent gain with ex-transportation numbers coming in up 0.5% in May.  Also at 8:30 AM is International Trade in Goods where forecasters expect the deficit to widen to 68. Billion in May vs. the 67.3 billion reading in March.  Pending Home Sales at 10:00 AM expect an increase of 0.6 percent in May but remaining overall flat for the year.  Then at 10:30 AM the last market-morning report of the day comes from the un-forecast EIA Petroleum Status Index.  Other than that we have Retail inventories & Wholesale Inventories @ 8:30 AM, two Fed Speakers at 11:00 AM & 12:15 PM and two Bond Auctions.

We have 20 companies on the Earnings Calendar today expected to report results.  Among those reporting PAYX, MON, GIS report before the bell while RAD, PIR, and BBBY report after the close.

Action Plan

With the modest bounce in the indexes, it was tempting to forget about trade war tensions and want to buy into the dip.  I continued to repeat the need for caution and as for myself added no new positions.  Sadly that appears to have been the right decision with the Dow Futures pointing to another gap down of more than 100 points at the open.  With a busy Economic Calendar and a few Earnings reports before the bell that could certainly improve or get worse before the open.

I will need to see more conviction from the Bulls to enter new long trades, and I will matain stick to my rules and resist chasing into short trades that have already made significant moves lower.  Trading is a marathon, not a sprint and you don’t have to trade every day to be successful as a trader.  Avoid anticipating or predicting bottoms and wait until price action confirms good entries.  Remember cash is a position and in times of market uncertainty, it may be the best position especially if you’re an inexperienced trader.

Trade Wisely,

Doug