Record-Breaking Holiday

It would seem the record-breaking holiday spending is bringing out a wave of bulls this morning squeezing the bears that held short positions over the weekend.  The Dow is currently expected to gap up nearly 250 points.  As nice as is to see some relief in the selling be careful not to get caught up in the morning hype chasing into the gap.  First, consider that volume has the potential of being light today as many traders extend vacations and that the Cyber Monday sales event will attract a lot of attention away from the market.

Secondly, keep in mind that one day does not make a trend and that all the index charts have significant price resistance levels above.  While it’s true, this could be the beginning of a Santa Claus rally it could also be nothing more than a pop and drop unless we see real buyers stepping in to support the gap after the open.  If you happen to be in long positions, then remember that gaps are gifts, consider taking some profits.  If, like me, your mostly flat this morning then we have already missed the move which means there is no need to rush.  Maintain, your discipline, don’t chase and wait for the next entry that provides you an edge.

On the Calendar

We have 42 companies on the Earnings Calendar expected to report results this Cyber Monday to keep us on our toes.

Action Plan

The bulls seem very inspired today as holiday shopping blows past all previous records and its far from over.  The estimates for today’s so-called Cyber Money sales event is expected break records as well with more than 7 billion in online sales with the vast majority coming from mobile devices.  It would seem shopping from the phone has now become the preferred method of holiday shoppers.

As I write this the Dow futures are pointing to a gap up of more than 250 points.  Anyone caught short will most certainly experience the pain of a short squeeze this morning.  With the nasty winter storm that swept across the central US, travelers found themselves trapped at the airport as 1000’s of flights canceled.  Combine extended vacations, travel issues and Cyber Monday I would be very careful about chasing into this mornings pop until we see buyers stepping up to support the gap.  It’s entirely possible that volume could be light today after the morning rush so keep a very close eye and price action.  As nice as it is to see a relief rally keep in mind the indexes have significant resistance levels above which means a pop and drop day is not out of the realm of possibility.

Trade Wisely,

Doug