Slow yet constructive price action.

The market was a bit slow yesterday, but I saw as very constructive price action.  While it’s true the indexes chopped in a rather small range yesterday, it seemed only to be resting after the rally.  Perhaps both the Bulls and Bears are just pausing ahead of big earnings reports to give them some directional inspiration.  Whatever the case may be, it is our job as traders, to maintain discipline.  Avoid the emotional drama of the season.  Focus on the price action react by following it rather than trying to predict it.

On the Calendar

Tuesdays Economic Calendar has three importing reports, but they are unlikely to move the market unless they come in with a big surprise.  At 8:30 AM Eastern we have Import Export Prices.  Follow by the Housing Market Index and Treasury International Capital at 10:00 AM and 4:00 PM respectively.  Import Export number is expected to decline by 0.2% in largely on the back of low energy prices.  The future housing sales expectations are expected to remain strong.  Forecasters see it ticking higher this month from 67 to 68 on the Housing Market Index.  The Treasury International Capital number tracks foreign demand for Long-Term Us securities.  It normally fluctuates with the strength of the U.S Dollar.

On the Earnings Calendar, we have 45 companies reporting today.  Noteworthy reports will form GS, BAC, JNJ, and PGR before the market opens.  IBM which has been under a lot of selling pressure since Buffett lost confidence in the company reports after the bell today.

Action Plan

Although yesterday was a pretty slow day with the market taking a bit of rest, it was still very constructive day.  Price action was somewhat choppy, but Bulls maintained their position of control.  The QQQ’s is the only index showing stress leaving behind a Shooting Star Pattern right a price resistance.  IWM once again threatened a breakout pushing hard against resistance, but once again it proved to be too strong preventing a breakout.

As I write this, futures are slightly higher, but the direction of the market will be directly impacted by big earnings reports this morning.  The truth is anything is possible, so it’s important to remain flexible and set aside personal biases.  Don’t predict just follow the price action as it presents itself.  There are a lot of good charts showing bullish setups this morning.  However, I want to avoid the drama of the open and will likely allow 15 to 30 minutes of price action to occur before making any new trade decisions today.

Trade Wisely,

Doug