Wall of worry

With the Bulls climbing the wall of worry toward resistance and all-time highs there seems to be a tentativeness in their pace.  Perhaps is the just the summer doldrums with August vacations robbing volume or perhaps such fast rally without a confirmed US/China trade agreement has the Bulls questioning current valuations.  Consumer defensive stocks continue to trend higher as do consumer staples and utilities are raising my concern there is a rotation toward safety.

My genuine hope is that the Bulls win the day and market enjoys a solid breakout rally.  However, there are clues of caution that we should not ignore.  Plan your risk carefully and be careful not to over-trade as the market creeps toward resistance.  In my opinion, the QQQ currently appears the most vulnerable to a Bear attack so come on Bulls chug an energy drink and get moving.

On the Calendar

A very light day on the Economic Calendar today.  We start with the Redbook at 8:55 AM Eastern and end with a 4-Week Bill Auction with nothing in between.

On the earnings Calendar, there are 32 companies stepping up to report results today.  Before the bell, we will hear from, KSS, MDT, SJM & TJX.  After the bell, JKHY, LZB, JRJC & MYGN will report.

Action Plan

Asian markets we up overnight as the US and China continue to work on a trade agreement.  Currently, European markets are mostly bullish with the FTSE basically flat on the day.  US Futures are pointing to a bullish open this morning as the Bulls continue their tentative push higher.  The Dow closed above its March high while the SPY inched its way toward price resistance and new record highs.  IWM also seems content to climb the wall of worry, as it grinds toward resistance.  Although holding at its uptrend, the QQQ’s appear to be struggling and will be watching closely for failure clues.

Getting this close to a record high in the SPY I want to believe the bulls will get the job done but I also have to give respect to resistance.  After all, double top patterns develop in the same way.  As a result, we need to keep a close eye on price action as we climb this wall of worry.  There are a lot of very good looking charts but be careful in loading up on to much risk given the overall market condition.  At the moment the QQQ’s seem the most vulnerable to a Bear attack and should be closely watched.

Trade Wisely,

Doug