Taking Profits to the Bank.

After posting the first 10-day bull run in two years, I have Taking Profits on mind this Friday.  It has been an amazing run, and it’s very thoughtful of the Bulls to have kept it going to our normal profit taking day, Friday!  With the QQQ’s and the SPY posting a hanging man pattern yesterday I am further encouraged that is time to go the bank.  Please don’t misunderstand; I’m not suggesting the market is going start falling!  I am merely suggesting there are enough clues that I need to take some profits and reduce my long exposure ahead of the weekend.  After all, isn’t consistently profiting the goal of professional trading?  Never let greed prevent you from taking profits on a consistent basis!

On the Calendar

Today we get a very nice rest on the Economic Calendar with only the Baker-Hughes Rig Count at 1:00 PM Eastern.  The Rig Count tracks the number of actively operated oil and gas rigs.  It a relatively benign number and very unlikely to move the market unless it reports a major surprise.  That wraps up the Economic Calendar for this week.

We also get a Friday break on the Earnings Calendar with only 34 companies reporting earnings.  Some the notables are CL, HON, GE, and KSU.  Although important I don’t see any reports that are likely to be big market movers today.

Action Plan

Yesterday we as we DIA product a couple of whipsaws that for a short period looked like the Bears were grabbing control.  The Bulls went to work defending prices and closing the SPY, IWM, and the QQQ’s at new record highs for the first ten-day winning streak since 2015.  As good as is was to see the Bulls step-up and defend we left behind a hanging man pattern on SPY and QQQ.  The pattern is a warning that the Bulls could be running out of fire power but as with many candle patterns, it does require follow-through.  However, it does warrant raising caution levels.

Futures were lower during the night, and currently, they are suggesting a slightly lower open.  After 10-days up it’s not a surprise that some profit taking ahead of the weekend is likely.  The MSFT report was positive on both the top and bottom line, and the stock is currently indication a higher open.  Of course, there is always a chance the price could fall below our short strike at $72.50, but we should expect exercise.  All that means is that we got paid to sell our position at a much higher price.  I will be much more focused on profit taking than new entries today.

Trade Wisely,

Doug