Tough Decisions

With so much data coming out today and the beginning of the FOMC meeting traders will have some tough decisions to make.  Toss in after the bell AAPL earnings report with the power to gap the Wednesday open planning your risk becomes very important.  A tough decision to be sure.

Asian and European markets had mixed results overnight, and although the Futures are currently pointing to a slightly bullish open a little fear is creeping into the market.  I continue to suggest caution, especially for inexperienced traders.  With so much data dumped on the market all at once remember that even the best of signals can quickly reverse so plan your risk carefully.

On the Calendar

We kick off a big day of potential market-moving reports.  First, Personal Income and Outlays are expected to rise 0.4 percent with consensus suggesting the year-on-year rate of 2.3 percent.  Also at 8:30 the Employment Cost Index is expected to rise 0.7 percent with the year-on-year number first quarter coming in at a ten year high of 2.7%.  At 9:00 AM the CoreLogic Case-Shiller expects to show a monthly gain of 0.3 percent in home prices with the but the year-on-year number staying flat at 6.6 percent.   The Chicago PMI expects a slight pullback in July to 62.3 vs. the 64.1 June reading at 9:45 AM.  Finally, the Consumer Confidence report at 10:00 AM expect steady strength with a reading expected at 127.0 for in July vs. 126.4 for June.  If that were not enough, we have the beginning of the 2-day FOMC meeting, Read Book @ 8:55 AM, Stat Street Confidence Index @ 10:00 AM and a Bond Auction @ 11:30 AM.

On the Earnings Calendar, we have more than 230 companies reporting so keep checking earning dates against companies you own and have a plan to protect yourself.

Action Plan

Yesterday was a bit nasty with NASDAQ stock under pressure pushing the QQQ down and testing a key level of support.  The DIA, SPY, and IWM also came under selling pressure and raising concern that the current uptrend may soon end if the bulls don’t step in and support prices soon.

Currently, Futures markets are trying to put on a brave face indicating a slight bullish open, but with so many reports in both earnings and economic calendar, any is possible.  I would suggest caution until we see clear signals from the bulls that the pullback is over.  Remember, AAPL reports after the bell today and can move the market, so plan for the high probability of a substantial gap open on Wednesday.  Also, keep in mind after the morning rush we could see choppy price action as we wait for the FOMC decision on interest rates.

Trade Wisely,

Doug