Who let the Bears out?

The market has obviously been showing weakness, and I have been expressing the use of Caution for some time now.  So who let the Bears out today?  That blame falls right on that puffy little dictator in North Korea by firing a ballistic missile over the top Japan.  As luck would have it our shoot from the hip president has been quiet about the subject with no antagonistic Twitter posts.  Perhaps he has learned the error of his ways, but it could also have gone quiet as the US plans its military response.  Either way, the market hates uncertainty, and this action creates more questions than answers.  Be very careful my friends.  Expect a major injection in volatility which can create big swings both up and down making a dangerous environment for most traders.

On the Calendar

The Economic Calendar gets going at 9:00 AM Eastern with the S&P Corelogic – Case -Shiller HPI.  I think the first thing they need to do is find a new name for this report!  LOL.  The Consensus for June is to remain strong with an 3% increase, with the year on year number coming in at 5.8.  At 10:00 AM we get the Consumer Confidence report which has been beating consensus in recent months.  The July number was very strong at 121.1, but forecasters are calling for a pullback to 120.6 in August.  The calendar rounds out with a couple more nonconsequential reports and bond auctions.

Today on the Earnings Calendar we have about 50 companies reporting.  Make sure you continue checking the companies you hold or are considering for purchase.  It’s very easy to forget about earnings this late into the season and get caught in with a nasty surprise.  Make checking for earnings a habit of your daily planning as well as you individual trade planning.

Action Plan

Yesterday the morning futures pump by the big boys created yet another pop and drop in the price action right at resistance levels.  I hope everyone is beginning to see clues to this type of price action and learning to wait for confirmation rather than chasing the morning pump.  Add in the drama that the financial news creates and a trader can easily make poor emotionally based decisions.  Take it from a former yo-yo trader that would allow time like this to chop my account to pieces and destroy my confidence.

Today the futures are pointing to a triple digit gap down in the Dow as the market reacts to the actions of the North Korean dictator.  Firing a ballistic missile over Japan would seem to prove just how unstable he has become.  The market hates uncertainty so we can expect volatility to ramp up making it difficult to trade.  Unfortunately, the major index charts are in a position that a sharp sell off only serves to increase the technical damage.  It will also reinforce the emerging downtrends with yet another failure at a lower high.  The danger of a substantial seems to be growing so plan according and protect your capital.

Trade Wisley,

Doug