After breaking new yearly lows on Tuesday, we have rallied strong into the weekend. As I’m writing this, futures are actually up because of Euro news this morning. The question is how long until we receive more negative news? We can only hope to avoid negative headlines for a while and have strong earnings this season with strong CEO guidance for future quarters, but that is asking a lot.
We broke to new lows of the year only to end the week near the top of the trading range. So, is it time to buy after this move? Unfortunately, I do not believe now is the time to buy, I believe we are setting up for another fall back to at least the lows of the year, if not lower.
The good news is we don’t have any macro data coming out on Monday to bring us down. We have the FOMC minutes on Tuesday that will be a focus of attention. Friday has retail sales which will be a main focus for many.
| Date | ET | Release | For | Actual | Briefing.com Forecast | Briefing.com Consensus | Prior | Revised From |
|---|---|---|---|---|---|---|---|---|
| Oct 11 | 14:00 | FOMC Minutes | Sep. 21 | |||||
| Oct 12 | 07:00 | MBA Mortgage Index | 10/08 | NA | NA | -4.3% | ||
| Oct 13 | 08:30 | Initial Claims | 10/08 | 400K | 406K | 401K | ||
| Oct 13 | 08:30 | Continuing Claims | 10/01 | 3700K | 3700K | 3700K | ||
| Oct 13 | 08:30 | Trade Balance | Aug | -$45.5B | -$46.1B | -$44.8B | ||
| Oct 13 | 11:00 | Crude Inventories | 10/08 | NA | NA | -4.679M | ||
| Oct 13 | 14:00 | Treasury Budget | Sep | -$64.0B | -$67.0B | -$34.6B | ||
| Oct 14 | 08:30 | Retail Sales | Sep | 1.2% | 0.6% | 0.0% | ||
| Oct 14 | 08:30 | Retail Sales ex-auto | Sep | 0.4% | 0.3% | 0.1% | ||
| Oct 14 | 08:30 | Export Prices ex-ag. | Sep | NA | NA | 0.3% | ||
| Oct 14 | 08:30 | Import Prices ex-oil | Sep | NA | NA | 0.2% | ||
| Oct 14 | 09:55 | Mich Sentiment | Oct | 60.0 | 60.0 | 59.4 | ||
| Oct 14 | 10:00 | Business Inventories | Aug | 0.4% | 0.4% | 0.4% |
This action to the top of the range has been too fast, too quick after breaking lows of the year. We broke the yearly lows for a reason, so optimism tends to be short-lived. Keep that in mind when you consider buying because many times market players will rush to buy thinking they are about to miss out. That sort of feeling can cause reckless buying which will cause more pain than pleasure most of the time. We are in a bear market, the momentum is to the downside, so respect that.
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I’m net short the portfolio again and will mostly day trade longs as I do not want to hold additional long inventory overnight after this fast move up. I’ll look to increase my shorts if we start to break down as the move down could be very fast. I don’t expect a market crash, just another move towards the lows of the year. You can view my portfolio changes for free on SeekingAlpha where I’m followed by over 36k market players (shameless promotion).
As always, do your own homework to see if you agree. Good luck out there.
Mike
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