Morning Market Prep March 12, 2018

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Predicting

This weekend I received an email suggesting that I’m completely wrong and that all trading and all traders are predicting.  I wholeheartedly disagree.  Gamblers are predictors that continually lose money because they focus on the big win rather than the business of trading.  To be successful as a trader over the long haul, you have to think like the CEO of a business.  A CEO makes business decisions only after careful risk analysis and planning that puts the odds of winning in their favor.  In other words, a good trader thinks like the House working every day to maintain a statistical advantage where the potential rewards are always greater than the risk.  Be the House!  Make business decisions and leave the predicting to the amateurs.

On the Calendar

W have a busy week on the Economic Calendar, but we kick it off with a light Monday.  We have five bond events throughout the day follow only by the Treasury Budget at 2:00 PM.  The consensus is calling for a monthly deficit of $216.0 billion because of tax reform.

On the Earnings Calendar, this should be the last big week of the quarter with more than 500 companies reports.  Today we will hear from about 120.  Remember checking earnings reports against current holdings each day as part of your daily preparation is an important habit to develop.

Action Plan

Friday was a rip-roaring day as the bulls gathered in a show of force and firmly re-establishing their control of the market.  The QQQ set a new record high to begin the day and just kept right on pushing higher through the close.  The SPY not only drove through the downtrend line but also managed to close above the February resistance.  The IWM tested the resistance of record highs, and even the DIA which has been lagging behind found the energy to break through its 50-day average.

As I write this, the Dow Futures are pointing to a 100 point gap up to punctuate Friday’s bull run.  Even though the bulls appear are large and in the pre-market be careful not to get caught up in the exuberance by chasing.  To marks, the 7th day of a straight up QQQ’s rally and with today’s gap up the Dow will have improved by nearly 900 points in 4 days!  A little rest or even some profit-taking is not out the question.  In-fact a consolidation or slight pullback to test supports would be a very normal and healthy price action.  Your watchlist of trending stocks should now contain a target rich environment for quality setups assuming the bull maintain control.

Trade Wisely,

Doug

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