From the Trading Desk

Stocks Advance Again Volume Jumps

Tuesday’s has been very profitable for the market accounting for 70% of gains and today wasn’t any different. Overnight the Nikkei 225 gained more than 3% as the Bank of Japan executes its QE program. If the Federal Reserve were to match the rate at which the BOJ is running the Fed would be printing more than $200 billion a month! This market would go nuts with that kind of liquidity not to mention what a headache it would create to unwind that kind of program. The market may be at lofty levels, but anyone shorting this market has been at their own demise. Today was just another example of why it has not paid and will never pay to find this trend.

The Sell-in-May crowd is still waiting for the big decline in the market and if the bulls have anything to say it will be awhile before this market corrects. Since the lows in November the S&P 500 has risen 20% and we have not seen a 5% correction. You could say we are long in the tooth, but we have $85 billion a month to keep this market propped up. Zerohedge had an article laying out the months where there was POMO and when there wasn’t. It is pretty obvious non-POMO months didn’t end well. When this market will correct can be any day, week, or month from now. However, until we see the sell signals this market will likely move higher. It is absolutely futile to fight this tape.

Earnings gaps continue to be fruitful. Using option straddles has been profitable strategy for stocks prior to reporting earnings. Earnings moves have been very powerful. Find a process and execute. Our Big Wave Trading chat room highlights possible straddle targets join as a Platinum member and see what we are targeting.

It is very important to keep your head in the game and execute your game plan. Fighting this trend won’t get you anywhere. As new buy signals hit you must act. Ignore the talking heads on the television and make sure your game plan knows where you are going to exit. No one knows when this market will finally have a correction. It isn’t your job to guess when it will happen, but stick with this trend until we have a sell signal.

Go get ‘em.

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