Stretched But Still Climbing

The markets waffled and then drifted higher Monday on a lull in news.  A late-day push by the bears was unable to stave off another all-time high close on the SPY, DIA, and QQQ…but barely.  More troublingly, breadth dwindled again as T2122 fell back into the 50s while we printed those new all-time highs.  This means fewer companies are participating in the rally.  As we said in the room today, the rubber band is getting pretty stretched.

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The only “in day” news Monday was a meeting between President Trump and Fed Chair Powell.  While such meetings have happened often in the past, never has a President continually belittled and berated the Fed before and certainly never calling the Fed Chair (he appointed) an “enemy of America.”  The White House says the President made a case for negative rates, while Powell explained the current Fed policy. Regardless of the President's temperament, both sides reported the meeting was cordial. Neither side claimed any changes were decided.

Tuesday's major economic news is limited to Building Permits (8:30 am).  However, there will be a Fed speaker at 9 am.  Major earnings include HD (see below), KSS, MDT, TJX, and TDG all before the Open.  In addition, Impeachment Hearings resume Tuesday with several people scheduled to testify.

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Overnight, Asian markets were flat to green.  In Europe, markets are mixed, but mostly green at this point.  As of 7:30 am, U.S. futures are pointing toward a gap higher of between 0.2% (DIA and SPY) and 0.4% (QQQ).  However, HD also reported a sales miss and lowered its full-year guidance this morning. It may also be worth noting that the Hong Kong siege may be winding down with only 100 people still hold-up inside the surrounded University campus.

With all the important earnings coming before the bell and Impeachment Hearings likely controlling the news cycle during the day, it would not be surprising for markets to gap and drift Tuesday.  However, unexpected news (diversion?) from the Trade War with China can always surface.  Either way, the bulls have really only wanted to hear good news for months now.  So, don’t get caught over-reacting to a temporary shock.  Continue to be cautious, take profits and move stops.  Remember that a Trader’s job is to consistently make gains…not to hit the occasional home run.


Swing Trade Ideas for your watchlist and consideration. Long – ALLE, PSX, IFF, IPG, MGM, ITW, PCAR, PKG, LEG, GE, VLO, INTC, APH, NTRS, UTX, WFC, KSU, STI, MS, KR. Short – MCD, FE, CCEP, NI, MYL. Trade smart, take profits along the way and trade your plan. Also, do not forget to check for upcoming earnings. Stocks we mention and talk about are not recommendations to buy or sell.

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Disclosure: We do not act on all trades we mention, and not all mentions acted on the day of the mention. All trades we mention are for your consideration only.

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