Morning Market Thoughts

Good morning.

Futures are down by quite a bit this morning, with the S&P set to open down 15 point, and the Nasdaq down around 50 points. North Korea lobbed a missile over Japan after the close and the Dow futures immediately opened down 100 points. This sparked selloffs in Europe and Asia. The uncertainty about what the North Korean rogue regime is going to do seems to be reaching a fever pitch. It’s finally starting to hit the markets.

But there are other reasons for the weakness. The latest episode of “Raise the Debt Ceiling” is upon us and nobody really knows how it plays out. Always a lot of rhetoric and jawboning on both sides. But in the end, we all know how it’s gonna work out.

I’d like to tell you whether this is a buying opportunity or not, but there’s no way to know until the market opens up. You are probably mostly in cash, and this is your reward. The ugly open can provide some great trading buys, and I encourage you to visit the forum to see what everyone else is doing. Many eyes spot a lot more opportunities.

This is one of the days when taking a few minutes to check in can translate to dollars.

On the earnings front, Best Buy (BBY) reported earnings that seem to be pretty good. The reason I say “seem to be pretty good” is that they beat on revenues, earnings, and comps relative to last year’s second quarter —but the stock is down 2.5% from yesterday’s close…and is still falling.

Here’s how the post-earnings action played out. The stock closed at 62.47. Earnings results were reported and the stock immediately ran up to $67

After an initial move higher from $62 up 7% to $67. It then fell , the stock is down 10% from $67 to its current low of $60. So the stock has made a very wide ranging round trip. I’m covering this because I often say that the first move is typically the wrong move. Maybe its algorithms acting in a microsecond based on pre-programmed numbers; or maybe it’s eager traders who see numbers that are either better or worse than expected and they act accordingly. Or maybe its both. Irrespective of the reason for the first move, it’s important that you understand that you are probably not getting ahead of the market by jumping on pre-market moves.

Trading between the bells is what we need to do. Your biggest profits will occur in the morning, whether you are buying a stock right, or taking profits. Most of the action is between 9:30 and 11:00. If you can master that part of the trading day, you’ll be fine.

See you in the forum to trade this very weak open.

–Dan

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