Earnings have moved the markets slightly in the past week, but Europe has been the real mover yet again. Unfortunately, this has made for some very poor trading as we are handcuffed to the headlines yet again. The computerized bulls (High Frequency Trading) are still in control of the market and we don’t know when they will turn their buying programs to sell. Instead of repeating my article from late last week, I’ll just give you a link here.

Options expiration is over and this week has very little economic news in the first half (see calendar below). That, in itself, could be bullish due to the past of least resistance. Over the weekend was an EU summit that gave a political fluff headline basically saying, “we’re making good progress but haven’t agreed to anything just yet” that is causing the overseas markets to show bullishness as I write this. The fact we are interpreting that as positive news is shocking which is adding to the skepticism of many market players, myself included.

Week of October 24 – October 28
Date ET Release For Actual Briefing.com Forecast Briefing.com Consensus Prior Revised From
Oct 25 09:00 Case-Shiller 20-city Index Aug -4.0% -3.5% -4.11%
Oct 25 10:00 Consumer Confidence Oct 46.0 46.0 45.4
Oct 25 10:00 FHFA Housing Price Index Aug NA NA 0.8%
Oct 26 07:00 MBA Mortgage Index 10/22 NA NA -14.9%
Oct 26 08:30 Durable Orders Sep -1.5% -1.0% -0.1%
Oct 26 08:30 Durable Orders -ex Transportation Sep -0.1% 0.4% 0.0% -0.1%
Oct 26 10:00 New Home Sales Sep 290K 300K 295K
Oct 26 10:30 Crude Inventories 10/22 NA NA -4.729M
Oct 27 08:30 Initial Claims 10/22 400K 403K 403K
Oct 27 08:30 Continuing Claims 10/15 3700K 3700K 3719K
Oct 27 08:30 GDP-Adv. Q3 2.0% 2.2% 1.3%
Oct 27 08:30 GDP Deflator Q3 2.2% 2.5% 2.5%
Oct 27 10:00 Pending Home Sales Aug 0.0% -1.0% -1.2%
Oct 28 08:30 Personal Income Sep 0.4% 0.3% -0.1%
Oct 28 08:30 Personal Spending Sep 0.8% 0.6% 0.2%
Oct 28 08:30 PCE Prices – Core Sep 0.1% 0.1% 0.1%
Oct 28 08:30 Employment Cost Index Q3 0.6% 0.6% 0.7%
Oct 28 09:55 Michigan Sentiment – Final Oct 57.0 57.5 57.5
I’m still looking for a bullish move up on more fluff headlines, with the main one being potentially this Wednesday as a deal is supposed to be announced then. If we do get the fluff headline, look for the bulls to rush in and that is where I will be selling down more long positions and adding to shorts via going long ProShares UltraShort S&P500 (SDS). I’m still keeping positions small compared to a bull market when I am nearly fully invested at all times, the headlines are too tough to predict and they can swing us to the opposite direction very fast creating significant losses. Talks of Italy needing assistance could start growing at any time and that could quickly kill any bullish momentum when we talk about an economy that large needing global assistance.

As always, do your own homework to see if you agree. Good luck out there.

Mike

At the time of publication, Kudrna was long SDS but positions may change at any time.