Is there a storm on the horizon or just a lot of hot air?

Today’s market is filled with news-driven events most of them political in nature.  Could there be a storm on the horizon or will it be nothing more than a lot of hot air blowing around?  Who knows but one thing for sure is that it is likely to be great fodder for Saturday Night Live skits!  I would recommend caution with the futures pointing to a gap up open ahead of all the events about to unfold this morning.  Anything is possible, and I think it would be wise to plan for whippy price action today.  As the drama is acted out on both sides of the political isle swift price moves are possible.  Although I will looking for new trades, I have no desire to compete with a three ring circus.  As a result, so I will be waiting for price action to settle and show me the way.

On the Calendar

Today we have a lot for the market to chew on, but most of it is not on the Economic Calendar.  First up we have the weekly Jobless Claims at 8:30 AM Eastern.  Claims continue to be unusually low pointing to a strong labor market.  The positive trend is expected to continue with the number released this morning.  In fact, it would likely have to come in as a huge surprise to move the market.

On the Earnings Calendar, there are 36 companies expected to report today.  Marke sure to check current holdings and new purchases for potential earnings reports.

The big events will be in the news today.  First off we have ECB decision this morning with a speech following by Draghi.  Obviously, this can move the market if there is something unexpected revealed.  Later today at 10 AM the circus act in Congress will begin the testimony from Jame Comey.  The market saw a slight rally yesterday when details of his interactions with the President were released.  It would appear that there is no smoking gun despite all the rhetoric.  Of course, if something groundbreaking said during the testimony the market could react wildly so plan accordingly.  There is also the possibility of market turmoil with the parliamentary elections in the U.K. and their impacts on Brexit.  A wild and wooly day to be certain.

Action Plan

With so much potential market moving news this morning I want to be very cautious this morning.  Currently, the futures are pointing to a gap up open setting the stage for a whipsaw price action ahead of all the news.  If something unexpected happens to be revealed in the Comey congressional dog and pony show swift price moves are likely to occur.  Anything is possible today so have a well thought out plan for current holdings as well as new positions you are considering.  I will be looking for new trades, but I will move slowly as these events unfold.

Another issue to be mindful of is the unusual price action of bonds moving higher with the market.  Normally bonds would decline as the market rises, but right now bonds have been gaining ground right alongside the overall market.  I’m not suggesting this is signaling impending doom, in fact, I don’t know what to make of it, but I do think it requires our attention.  Perhaps it’s nothing, but it is odd and may be providing clues to growing market fears.

Trade Wisely,

Doug