Who poked the Bear?

Okay, who poked the Bear?  Most reasonable thinking traders have expected a market pullback while secretly hoping the bears would not come back to work at least for a while longer.  After all who wants the party to end?  It seems unfair when the market makes an overnight reversal that traps the retail trader, but that is the nature of this business.  As an inexperienced trader, I would always try to assign blame to someone or something when I lost money on mornings like this one.  When the truth of the matter was the blame, was mine and mine alone.  When the market was super bullish, I would chase, trades like a madman never once evaluating the condition of the overall market.  Remember trading is a business and the buck always stops with you!

On the Calendar

The hump day Economic Calendar gets going at 8:30 AM with the Import and Export Prices.  Consensus for December has imports up 0.4% and export prices at 0.3%.  Talking about interest rates seems to be in vogue this week with four Fed speakers today.  Evans at 9:00 AM, Kaplin at 9:10 and then again at 10:15 with Bullard at 1:30 PM to finish up today’s tour.  At 10:30 AM is the EIA Petroleum Status Report which could be very important today with the recent rally in oil.

There are 14 companies expected to report today on the Earnings Calendar.  Front and center will be the builders with LEN reporting before the bell and KBH after the bell.  Remember the official kick off earnings session is Friday when several of the big banks report.

Action Plan

Yesterday saw yet another round of new record high closes in the DIA, SPY, and QQQ.  The IWM managed to break out, printing a new record high but then slipped back into consolidation.  I doubt anyone is all that surprised that the futures are finally pointing to a lower open this morning.  However, it’s always disappointing when it happens overnight traping retail traders.  Now the question is will it trigger some panic selling or will those tenacious bulls dig in to wait for earnings.

With the rally have been so strongly up you have to look at intra-day charts find price supports.  Keep in mind that potential reversals can create a lot of fast price action.  Violent whipsaws are possible if the emotions of fear or panic begin to well up.  Times like this can be very challenging for new or inexperienced traders so plan accordingly.

Trade Wisely,

Doug