Whipsaws

Over the last five days of trading, we have seen the market open with significant gaps follow by whipsaws.  Twice the market gaped down only to find buyers and whip back up.  There were also three days when the market gaped up only to end the day lower as seller whipped prices back down.  So after 100’s of points of daily travel in Dow whats the result?  The Dow is up a whopping 59 points!

So the fact that the Dow Futures are pointing to another gap of about 150 points this morning ahead of tariff increases and the FOMC minutes release should we be rushing to enter trades?  Fool me once shame on you, fool me twice shame on me.  Don’t allow the fear of missing out to control your trading decision, wait for better price action or wave goodbye to your capital as the market continues to chop up accounts.

On the Calendar

A busy day on the Thursday Economic Calendar.  Potential market-moving reports begin at 8:15 AM with the ADP Employment Report which the consensus expects 190,000 jobs created in June but keep in mind ADP’s accuracy is very hit and miss.  Weekly Jobless claims come out at 8:30 AM and forecasters expect a decline to 223,000 vs. last weeks reading of 227,000.  The unforecast EIA Petroleum Status report is at 11:00 AM and last but not least is the release of the FOMC minutes at 2:00 PM.    Non-market moving reports include Mortgage Applications @ 7:00 AM, Challenger Job-Cut Report @ 7:30, Consumer Confort Index &  PMI Services Index @ 9:45, five Bond Announcements, Fed Balance Sheet & Money Supply @ 4:30 PM.

On the Earnings Calendar, we have only six companies reporting today that are unlikely to move the market.

Action Plan

It’s interesting that the US Futures are positive today in light of the fact that Asian markets were moved lower during the night with new tariffs set to begin tomorrow.  Of course, with have seen big daily morning gaps the last several days that have proved punishing for those that chased the open.  Will today be different?  Only time will tell, but it would also be wise to remember that the FOMC minutes will be out at 2:00 PM today and volume could easily be anemic with traders extending their holiday vacations.  It would not be at all uncommon for the market to become light and choppy as we wait for the FOMC minutes.

I intend to remain cautious particularly during the morning rush.  Remember whipsaws are possible just like we have seen the last five trading days in a row.  Also, keep in mind that the Big Employment Situation number will be out Friday before the market open, so another big morning gap is possible.  The big question is in which direction?

Trade Wisely,

Doug