Uncertainty fuels the price action to another day of losses.

The short-term price action rally was only able to hold out for a brief time yesterday.  The Bulls had a short-lived spurt of energy but once GS started to turn back down everything followed.  Okay, enough of the past, where do we go from here?  I would like to think we are due for an oversold rally.  However, as of now, there is nothing in the charts to suggest that.

Earnings reports have the potential to dig us out of this hole, but if another bell weather like GS or IBM disappoints the Bulls may give up the battle.   After the bell yesterday we had a good round of reports, and so far this morning the results have lifted the futures.  The big question is will it be enough energy to break resistance?  I think we will need to see a media darling company like Amazon or Facebook blowing the doors off of expectations to make that happen.

On the Calendar

Right out of the gate this morning we have a Fed speaker on the Economic Calendar at 8 AM Eastern.  Two potential market-moving reports, Jobless Claims and the Philly Fed Survey at 8:30 AM.  The jobless number would most likely have to be a big surprise to move the market.  As a result, the Philly Fed number is the one to watch this morning.

Plan of Action

My plan for the day is simple.  Maintain my current positions and carefully watch for clues of a bounce.  Why a bounce?  The overall market has been in decline for more than a month.  I, of course, could easily be wrong but I think a relief rally could begin at any time.  Keep in mind there is not a thing in the charts currently suggesting that!  Also, know I will wait for evidence of a rally before adding long risk to my account.  My rules require that I only take short positions at or near resistance, not at new lows.  Waiting is hard but its better than buying up puts or trying to short at market lows.

Trade wisely,

Doug

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