Rebound Whipsaw

Yesterday saw some serious whipsaw, with a 10am free-fall on the extremely poor Non-Mfg. ISM number, followed by an immediate bounce-back.  This rebound seems to be built on markets pricing in a 90% chance of further Fed rate cuts in the Oct. FOMC meeting.  With that said, the bulls found their footing again late in the day and drove a rally right into the Close.  In the process, the SPY and DIA both climbed back above the uptrend (of Lows) line running back into June.

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This chart action gives us a high probability of a higher high on Friday.  Markets may even try to fill the Thursday Open gap.  However, nothing is guaranteed with markets unable to string together two consecutive up days for several weeks now. Needless to say, if we are going higher off yesterday's strong recovery, the bulls still have A TON of work to do (and levels to work through) to even break the downtrend (of Highs, which runs back to mid-September). 

Overnight Asian markets were mixed and European markets are mostly in the green so far. As of 7:30 am, US futures are pointing to a one to two- tenths gap lower.

Today’s economic news includes Durable Goods Orders and Nonfarm Payrolls and Unemployment before the open.  These could very well be market-movers as a follow-up to the bad ISM data this week. (Of course, we don't know if the market will be in a "bad news is bad news" or a "bad news means more helicopter money" mood. This will all be followed by half a dozen Fed speakers (including Chair Powell) during the day.  On other fronts, Impeachment, Brexit and the Hong Kong protests (or counter-reaction) will undoubtedly dominate the news.

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The bottom line is that it is very hard to swing trade these markets until we start getting less "gaps and whiplash" and more "trend and follow-through."  So be careful chasing after one nice (or ugly) candle.   Remember that Friday is payday.  So, be sure to book some profits in front of an unpredictable weekend of news.

Ed

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