Extreme price volatility displayed emotions from gloom and doom to bullish euphoria which produced a whipsaw on steroids. The good news is with the futures pointing to a possible follow-through this morning a nice bottoming chart pattern is possible. The bad news is that very little has changed and the political uncertainty is likely to keep volatility high with challenging price action.
This morning’s open will be about 800 Dow points off of yesterday slow. If that, not the very definition of extreme volatility I don’t know what is! Don’t chase the morning with the fear of missing out. Wait to see if buyers step in to support the gap and remember a pop and drop is now out of the question. Plan your trades carefully and realize this wild price action will require a higher tolerance to risk.
On the Calendar
On the Earnings Calendar,we have 34 companies on reporting, but we drop off into the lower twenty ’s and teens as the 4th quarter winds down.
Action Plan
No doubt about it the wild ride continues with a massive whipsaw covering about 1000 Dow points from top to bottom and then bottom to top. Asian markets also had a very volatile night but closing mixed but mostly higher. In Europe, the Sterling continues to fall after delaying the Brexit vote, but currently, their markets are shaking that off and are bullish across the board this morning. US Futures went into the evening down also made a nice recovery overnight and are currently pointing to a gap up around 200 points.
That’s around 800 Dow points off of yesterday’s low so be care not to chase fearing you will miss out. Remember we want to make sure buyers will actually step in to support the gap after the open rather than profit-takers selling into strength an producing a pop and drop pattern. With the wild volatility it will be very difficult to find low risk entry positions so if you do trade keep in mind your tolerance to risk should must be carefully considered.
Trade Wisely,
Doug
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