Price resistance holds strong.

The Bulls tried once again to break through price resistance yesterday day but once again did not have quite enough energy to do so.  The newly driven whipsaw left behind nice hammer patterns but it’s important to remember that that placement of this pattern is very important.  A hammer pattern at support is important.  The same pattern is drawn in a light volume rally that remains under resistance, not so much.  If fact some might call it a hanging man pattern at price resistance.  With the futures pointing to a gap up this morning, please keep in mind this is the perfect setup for a pump and dump whip whipsaw.  Don’t allow the emotion whipped up in the premarket to influence your trading decisions.

On the Calendar

Today Economic Calendar is dedicated to Janet Yellen.  The Fed Chair will deliver her opening statement in front fo the House Financial Committee at 8:30 AM Eastern.  She will then follow that up with the semiannual monetary policy testimony at 10:00 AM.  At 10:30 AM today we get the EIA Petroleum Status Report which last time showed a nice decline in supplies and helping oil companies find some support.  Today lets hope this trend continues.  At 2:00 PM is the Beige Book which may shed light on next FOMC action with the compiled data that influences their decision.  Lastly at 2:15 PM we have another Fed speaker to round out the day.

There are 21 companies reporting earnings today as we slowly ramp up 3^rd quarter reports.  Please remember to make checking report dates part of your morning preparation.

Action Plan

Yesterday saw another day of choppy price action with a news-driven whipsaw tossed in for good measure.  Unfortunately, the overall technical picture of the charts really didn’t change.  Resistance continues to be stronger than the will of the Bulls thus far.  The DIA remains the strongest of the indexes and the one most likely to lead the market higher if only it could break out.  Currently, futures are pointing to a higher open but keep in mind the market will hang on each utterance from Janet Yellen’s mouth today.  Be prepared for the possibility of whippy price action.

Flipping through the charts last night, I found a lot of possible setups for both long and short trades.  Personally, I remain bullish on the overall market but the fact all the indexes remain under resistance levels leaves a reason for concern.  With futures pointing to gap up into resistance I have to consider the possibility of a pump and dump.  As a result, I will give the market at least 30 minutes after the open before considering new trades just to make sure the bullishness attracts real buyers.

Trade Wisely,

Doug