Tweet-storms an uncertainty.

Sadly yesterdays bullish attempt to break through resistance was unsuccessful amid presidential trade comments and Tweet-storms that continue to ruffle feathers.  The bad news is that the futures this morning are pointing to a gap down market open confirming the bearish engulfing patterns printed on all four major indexes.  The good news is that the 50-day moving averages and the current trend still hold the possibility of supporting price.

Unfortunately, as the trade negotiations continue the market will have to tiptoe on eggshells as we wait for a resolution.  Toss in the North Korean summit the North American trade negotiations and the FOMC minutes, and we have a pile of uncertainty likely to keep the market on edge.

On the Calendar

The hump day Economic Calendar has four potential market-moving reports.  The first is the 9:45 AM PMI Composite Flash which consensus expects the composite at 54.8, manufacturing at 56.5 and services at 54.6.  At 10:00 AM New Home Sales according to forecasters will slow slightly to a 677,000 annualized rate vs. the 694,00 April surge.  The EIA Petroleum Status report at 10:30 AM has shown a slow, steady trend of declining supplies helping to support rising oil prices.  Then at 2:00 PM is the FOMC minutes which may shed more light on the Fed’s thoughts regarding future interest rates.   Other than that we have 2-bond auctions at 11:30 AM and 1:00 PM followed by a Fed Speaker at 2:15 PM to complete the calendar day.

On the Earnings Calendar, there are 33 companies reporting today.  Among those before the bell is TGT and LOW with CPRT and NTAP fessing up after the bell.  Stay on your toes.

Action Plan

A disappointing day in the market after the White House expressed disappointment about the progress of the China trade negotiations.  Unfortunately, that left behind bearish engulfing candle patterns on all four major indexes.  The bearish engulfing requires follow through with a lower low print today to be valid, and sadly the Futures are pointing to a substantial gap down this morning.  Of course, the move lower and failure at resistance is a concern but if there is a silver lining, it would that indexes still have their 50-day averages and trend as support.  Let’s hope the bulls are strong enough to defend and the Tweet-storms subside.

Trade Wisely,

Doug