Unable to find profit takers.
Although the market appears to be quite extended, its unable to find profit takers just yet. The VIX continues to dance near historic lows but as of yet unable to make a run for a new low print. Perhaps the market is waiting on all the Fed speak today or more likely focused on the Employment Situation number that comes out Friday morning. None the less I will continue to be very focused on price action and prepared to take profits ahead of the weekend if weakness shows itself. With an extended market and the weekend near, I will need to uncover a nearly perfect trade setup for me to buy additional risk.
On the Calendar
The Economic Calendar events of interest begin at 8:30 AM Eastern. International Trade forecasters are calling for a narrowing of the trade gap this month due to the hurricane effect. August is expected to come in at $42.5 vs. July’s 43.7 reading. A narrowing trade gap should be of benefit to the 3rd quarter GDP. Also at 8:30 AM is the weekly joblesss claims and is expected to come in with a reading of 265K vs. 272k last week. There are 4 Fed Speakers on the calendar today with three of them speaking in rapid succession beginning at 9:15 AM. At 10:00 is Factory Orders which is expected to rise 1% in August vs. the 3.3% decline in July.
On the Earnings Calendar, there are only 14 companies set to report. Of note are reports STZ before the open and COST after the close today.
Action Plan
The incredible strength of the Bulls kept profit taking in check even though it’s quite extended. The promise of a tax plan continues to inspire investment no matter the price or valuation. Also, keep in mind that earnings season will begin soon and there seems to be tremendous optimism of strong reports.
With the market continuing to show enough strength to hold up I maintained all the current positions. As a result, I again will focus on price action and prepare to take some profits before the weekend if necessary. As we wait for the big employment number Friday, it would not be a surprise to see choppy light volume action again today.
Trade Wisely,
Doug
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