Stuck in the Middle

With the indexes wedged between the significant levels of support and resistance, it reminds me of that old Stealers Wheel song, “Stuck In The Middle With You.”  The bears could easily take control and drive us down toward support, or the bulls could quickly mount another attack on resistance depending on which side finds the inspiration.  Pre-market earnings or economic new could easily provide that inspiration as could news on trade negotiations or the North Korean leader issuing threats.

So whats a trader to do?  Remain flexible and unbiased, stay focused on price action and have a plan ready for either direction.

On the Calendar

On this hump day, we have three potential market-moving reports on the Economic Calendar.  At 8:30 AM Eastern the Housing Starts consensus expect April starts to come in at 1.324 million annualized vs. 1.319 million in March.  New housing permits according to consensus will decline slightly to 1.350 vs. the 1.379 reading last month.  Industrial Production comes out at 9:15 AM and consensus expects a solid 0.6 percent gain with manufacturing growing by 0.3 percent.  Forecasters also expect Capacity Utilization of manufacturers to grow to 78.3 percent in April.  10:30 AM brings the EIA Petroleum Status Report is not forwardly forecast but has supported higher oil prices with U.S. reserves slowly declining.

There is a 7:00 Mortgage App. Report, a 10:00 AM Atlanta Fed Business Inflation expectation report and 2-Fed Speaker at 8:30 AM and 6:30 PM, none of which is expected to move the market.

The Earnings Calendar shows 55 companies reporting today with M coming in before the bell and CSCO after the market close.

Action Plan

After the morning gap down yesterday, the bears made a solid attempt to move the market lower but the bulls put in a very strong effort lifting the indexes of the low of the day before the close.  Unfortunately, DIA, SPY, and QQQ are currently floating about halfway between significant support and resistance levels so price could easily break in either direction.  Futures have been bouncing between a positive and negative this morning as it waits on early earnings reports and housing numbers to find inspiration.

With North Korea kicking sand at the U.S. and ongoing trade negotiations we need to remain flexible because just one news report could influence the direction of the market in about half a heartbeat.  Stay focused on price and have a plan for either direction today.

Trade Wisely,

Doug