Two-sided price action.

It was of course very nice to the Bulls so inspired in the early morning session yesterday producing some very nice profits for the beginning of the week.  Unfortunately, after making a run at resistance levels, the price action became very two-sided and left behind candle patterns of concern rather than confidence.

Tucked up against resistance and printing possible topping candle patterns leaves a trader stuck in a bit of a quandary.  Is the door open to a path of profits or is it a trap door with just enough rope to hang yourself if you dare to wager a prediction.  I must admit I am holding on to hope that the bulls will find the energy to push through resistance but that hope will not prevent me from being ready if Bears ultimately wins the battle at resistance.

On the Calendar

An unusual second day in the row of no expected market-moving reports on today’s Economic Calendar.  The Redbook comes out at 8:55 AM Eastern, followed by the Richmond Fed Mfg. Index at 10 AM.  After that, two bond auctions are occurring at 11:30 AM and one at 1:00 PM.

On the Earnings Calendar, 50 companies are reporting their quarterly results.  Before-the-bell AZO, TJX, KSS, AAP and TOL.  After-the-bell,  INTU, and URBN may be noteworthy.

Action Plan

With a little uncertainty in the price action at resistance, it will be important to watch closely and have a plan for both a bullish or bearish move.  As this battle continues, it will be very important to remain flexible, unbiased and focused on price action clues.  The good news is that the early Dow Futures are pointing to another bullish gap this morning and perhaps indicating the Bulls have enough energy to follow through.

With the IWM suggesting the 6^th day up and another record high this morning I would watch this index closely for clues of a possible pullback at any time.  It may well serve as an early warning system for the overall market if a pullback does begin.

Trade Wisely,

Doug