Price Action Clues

The bullish trend is still intact but yesterday’s price action began to show just a hint of stress at this elevation.  I don’t think there is any reason for panic, but I think it would be wise to reign in trading activity just a little.  The bulk of earnings season will be over this week and yesterday made me wonder if the bullish energy with fade as well.  Please keep in mind there is nothing on the daily charts pointing to a pullback or correction as of now.  The truth is it may be nothing more than a rest before going higher, but at this elevation, I want to err on the side a caution.

What this means is I will be a little quicker to take profits, a little more cautious when adding new risk, and very focused on price action.  If the Bulls step back in, I’m more than willing to ride the wave with them, but if we slip into a choppy consolidation or pullback, I want to curtail my trading activity.  As the weekend approaches I will also be thinking of taking some profits and reducing my overall exposure.

On the Calendar

There is only one noteworthy report on the Economic Calendar today.  At 10:00 AM we get the latest reading from the EIA Petroleum Status report.  They do no forecasting on this number, but current oil price moves suggest that traders are expecting the surplus to diminish.

The Earnings Calendar makes up for the light economic day with more than 450 companies fessing up their results today.  So far earnings have produced a lot of bullish energy this quarter.  The question I have is will the bulls be able to maintain that energy when the bulk of earnings reports finish this week?

Action Plan

The market indexes continue to trend higher but appear to be showing signs of stress at this elevation.  I’m in no way suggesting the bull run is over, but I do think its time to elevate our caution level.  It may be wise to consider taking some profits, adjusting stops and slowing our buying activity.  It could turn out to be nothing more than a market rest before the bulls powering higher.  Stay focused on price action for clues.  Futures are currently pointing to a slightly lower open but with so many earnings reports that could easily change so stay on toes and prepare for anything.

Trade Wisely,

Doug