Who invited the Bears to party?

Who invited the Bears to party?  They have been hiding in the woods for so long it’s been easy to forget about them.  Buy just about anything, and up it went with this incredible bull run.  Overall the index trends still up but yesterday was a reminder that the bears have not eaten in a very long time and they are hungry!  Now that earnings season is coming to an end I think we can expect more volatility and 2-sided price action ahead.

The market will likely begin to shift its attention to retail and the impacts of holiday spending.  It will also begin to ponder the likely December interest rate increase.   Next weeks Economic Calendar is full of big reports that could move the market around and increase volatility.  Stay focused this historic year may still have several more surprises up its sleeve.

On the Calendar

We finish up this light Economic Calendar week with just one report of interest.  At 10:00 AM Eastern Consumer Confidence is expected to remain near 13-year highs with a 100.0 reading vs. 101.1 in October.  After that is the Baker-Hughes Rig Count at 1:00 but there is really no chance it will move the market at all.

As earnings season begins to wind down, we only have 73 companies on the on the Calendar today.  Keep in mind that Monday and Tuesday still have a considerable number of reports.  The habit of checking for earnings reports should become part of your daily preparation.  They say it only takes about 30 days to develop a good habit that you will keep for a lifetime.  Keep up the good work.

Action Plan

After an ugly bearish morning, the Bulls started to regain control.  The bulls maintained control in the aftermarket Futures throughout the evening.  About midnight, however, the bears began to push back and seem to still be in control this morning.  Futures are currently pointing to a gap down of about 50 points in the Dow at the open.  Volatility spiked yesterday, and the intraday price action experienced several nasty whipsaws.

Now that bulk of earnings reports are behind us I think there is very good chance we will see higher volatility.  The overall trend of the market is still up, but I don’t be surprised if price action soon becomes much more 2-sided with bears coming out to play.  Historically Nov. and Dec are bullish months for the market due to the holiday spending that occurs.  However, there is nothing about this year that has followed traditional norms.  Focus on Price Action, support, resistance, and trend.  Price will always provide the clues forward if we can remove our bias and focus on what it’s saying.

Trade Wisely,

Doug