Silver Lining

Without a doubt, yesterday was an ugly ride, but it also revealed a possible silver lining.  Where was the silver lining?  In the last 15 minutes of the day, we experienced a huge bounce that can only occur when the big institutions finally step in to snap up the bargains and defend the lows.  We still need proof of that with a follow-through rally today.  Make no mistake, if this is a short-term bottom the price action will still be very challenging to trade.

Asian and European had mixed results during the night, but the US Futures are currently pointing to higher open that has the potential of recovering some key support levels.  Fast price action, whipsaws and the possibility of overnight reversals will continue to make the waters very difficult to navigate.  With nearly 1000 companies yet to report this week anything is possible so prepare for the bumpy ride to continue!

On the Calendar

Tuesday begins with the CoreLogic Case-Shiller report at 10:00 AM and expecting at 0.1 percent monthly gain and the Year-on-Year rate at 6.0 percent.  Then the Consumer Confidence report is at 10:00 AM where consensus expects the October reading to decline slightly to 136.3.  After that we have two Bond Auctions at 11:30 AM, then the Farm Prices report at 3:00 PM.

On the Earnings Calendar, more than 280 companies are expected to report today.  Here are some the most notable: ACCO, AER, AET, AGCO, AGN, AKAM, ALSN, AMKR, AMT, AN, AOS, APTI, ARE, ARNC, ARRY, AVB, AWI, AXGN, BHGE, BKI, BLKB, BP, BRX, BTU, CGNX, CHGG, CLR, CMI, CNX, CTSH, EAT, ECL, EGHT, EHC, EPR, ERJ, ESV, ETN, EXP, FCAU, FET, FIS, FLIR, FTSI, GE, GPN, GWR, HCA, HMC, HUN, I, IDTI, INCY, INST, IPGP, KBR, KEM, KLAC, KO, LL, LYB, MA, MAS, MDLZ, MSM, NEO, OLN, PEG, PFE, QGEN, QTS, RIG, RMBS, SABR, SCI, SHOO, SNE, ST, TCO, TKR, TPR, TREX, TXRH, UAA, UDR, VMC, VNO, VNOM, VNTR, VSH, WAB, WCG, WCN, WDR, WELL, WH, WING, WLH, XYL

Acton Plan

I mentioned yesterday that I would not be surprised to see another leg lower but yesterdays price action was downright nasty!  However, the big swoon that was rallied strongly in the last 15 minutes of the day may be exactly the thing we needed.  The only way to have such a massive bounce at the end of the day is with institutions stepping up in a big way to defend the lows.  If and that is big IF, we can get a follow-through today, we may have finally put in a short-term bottom.

Expect very high volatility to continue with fast price action.  Traders should expect to be challenged by large morning gaps, intraday whipsaw and the possibility of overnight reversals.  How companies report will be critical.  Stay buckled up because the wild ride is far from over.

Trade Wisely,

Doug