E-mini Executors: The week ahead 7-25

The bulls continue to have control of this trade. They have almost everything going their way. The Nasdaq made new 52 week highs and closed on their high, this is bullish action. (The Nasdaq is the current leader of this market). The VIX has fallen below all of its major moving averages and looks bearish or range bound in the coming week. Of the 88 companies in the S&P that have reported earnings 75% of them have beaten the street. Plus the market has rallied despite all of the recent bad news about debt fears. It seems as though the market has taken the punch of bad news and swung back knocking it out.

Even though there is a lot of good for the bulls they still have some hurdles to cross. We still have a non-confirmation in the Dow Theory. The Transports and Dow have not made new highs for the year at the same time since May 2nd. Since then we have been seeing distribution not a primary bull trend. (I am still in the camp that we will see a Dow Theory confirmation of a bull trend). We also need to see the S&P cash to trade above the July high at 1356.48. This would be a big boost to the market and from there we could see a test of the 52 week highs rather quickly at 1370.58.

Other hurdles that seem to be on the top of everybodys mind........

DEBT CEILING. DODD/FRANK.

I have been asked several times what I think about these two issues and my answer is this: Politics in the market are a traders worst nightmare (unless you are a trader who bases decisions off of news). When a trader has to react off of news instead of technicals or fundamentals; in my opinion trading becomes gambling. Some traders live for trading off the news, I am not one of them. I do not know what is going to happen on either of these issues. I prefer to let the market action dictate my trading not Washington. I have learned that the market has a short term memory about news and it always comes back to technicals and fundamentals. I am not going to stay up at night wondering what decision Washington is going to make. I trade according to my plan.

Stick with your trading plan and do not worry about what Washington is doing. When Washington finally makes a decision on the Debt Ceiling or Dodd/Frank then the market will tell us how to react to those decisions. I will then be positioning myself according to the action that I see not the decision itself.

For my day to thoughts on the market check out my Morning Brief. Have a great week.

Moving Averages; Black (10 day), Blue (20 day), Green (50 day), Pink (200 day).

Horizontal Lines; Blue (High of the year), Red (Low of the year), Green (Unchanged for the year)