Saber rattling intensifies.

As the saber rattling intensifies between the world and North Korea, the US makes moves to cut off the countries money supply.  So once again the market faces an uncertain weekend.  Asian markets reacted lower, but currently, the US Futures markets are trying to shake off the threat.  The Bulls have been incredibly strong, and yesterday the price action began showing a little stress.  Combine an uncertain weekend, with the market at this elevation some profit taking would not be a surprise.  I would also not be that surprised if the Bulls decide to thumb their nose at the threat an rally in defiance.  Stay focused on price action and try not to predict.  The clues will be there if stay focused on price and control our emotions.

On the Calendar

The last business day this week begins and ends with Fed Speakers on the Economic Calendar.  At 9:45 we get the important PMI Composite.  The September PMI consensus composite number expectation is 54.9, and the manufacturing number is coming in at 53.0.   After that, it should be smooth sailing with only a couple of minor reports unlikely to move the market.

On the Earnings Calendar, we have less than 20 reports expected today.

Action Plan

As we head into the weekend the North Korean “Rocket Man” escalated his threating rhetoric.  The news is now suggesting he may detonate a nuclear device over the water soon.  Overnight the futures reacted sharply lower on the news.  Currently, the futures are trying to shake off his latest threat pointing to only a slightly lower open.

Facing another weekend of uncertainty It would not be unreasonable to see some profit-taking.  Yesterday the price action in the major indexes began to show just a little stress.  The DIA is now displaying a Hanging Man pattern followed by a bearish engulfing candle.  Even though it’s a bearish pattern, it only suggests a lower print is possible today.  Stay focused on the price action because it will provide the clues if we allow it to do so.  As you know, I favor taking some profits before the weekend and will not change today.  Have a great weekend everyone!

Trade Wisely,

Doug