Trust

Can we trust what we see this morning? The futures markets are suggesting a gap up open recovering part of Thursday’s 327 point selloff.  However, with Asian markets having sold off strongly last night and European markets mostly lower this morning I would be very careful not to rush in this morning.  With the weekend approaching and tensions growing not only with China but also Saudi Arabia we seem perfectly set up for a pop and drop this morning.

Please understand this not a prediction, and I honestly hope that doesn’t occur, but I do think we should consider the possibility.  After the open watch price action carefully to see it, there is follow-through buying supporting the gap or not.  Volatility remains high so consider carefully how much risk your willing to hold into the weekend.

On the Calendar

The Existing Home Sales report tops Friday’s Economic Calendar at 10:00 AM eastern time.  Forecasters suggest a slight decline to 5.300 million in September vs. August’s 5.340 million.  We have Fed Speakers at 11:30 AM, 12:00 PM and 12:45 PM  with the Baker-Hughes Rig Count at 1:00 PM closing out the calendar week.

With only 30 companies reporting today we have a lull before next weeks storm of nearly 900 companies reporting.  Today before the bell watch for reports from CFG, CLF, GNTX, HON, IPG, KSU, MAN, PG, SLB, STI, STT, SYF, VFC as the most notable.

Action Plan

Yesterday’s selloff was a nasty reminder that the volatility of this selloff it far from over and that it’s possible we have not seen the full measure of this correction just yet.  Asian markets had a rough night selling off strongly after missing economic growth targets.  Trade tensions between the US and China continue to grow with very harsh comments coming from the commerce secretary yesterday.

With European markets currently mixed but mostly lower this morning it’s a little surprising that the US Futures are suggesting a bullish open today.  Is it real or a head-fake that could produce a pop and drop pattern heading into the weekend?  Only time will tell.  Clearly, price action has been very challenging this week, and with the weekend approaching think long a hard about the risk you plan to hold.  Tough talk from the White-house of serious ramifications against Saudi Arabia also weighs on the mind of the market with the weekend approaching.

Trade Wisely,

Doug