US markets came off a long-weekend and moved higher after the Martin Luther King Jr. holiday. The Dow was the only exception on the day lead by IBM, JNJ, and TRV to the downside. Volume continues not to matter, but we’ll give today’s session a pass as Friday’s volume was boosted by options expiry. Price on the other hand continues to win out with the NASDAQ continuing its new high binge. We see the S&P 500 remaining within a tight range and continuing to trade with relatively small intraday swings. Perhaps the S&P 500 is simply waiting on earnings season to get in gear before it moves in either direction. This uptrend remains intact and it has proved worthwhile not to miss this recent move.
The Russell 2000 was not too far behind the NASDAQ composite today coming in with .6% gain on the day. Small capitalization stocks continue to perform well and are an important key to an uptrend and its success. We tend to lean toward small cap stocks for their gains and their dominance here confirms our process. While you can extract gains from larger cap stocks, but you simply do not get the big gains we get from the small caps. There is no way we can tell you when this ride will be over. However, our process will identify the most probable time and we’ll ignore those who are calling for a market top here.
Sentiment has crept into the mainstream financial media with CNBC et al are picking up the fact that many market participants are extremely bullish on the market. We like to point it out and continue to stress this is not an indicator that is remotely reliable. For one, the AAII is volatile and can swing from one end of the spectrum to the other in a week. NAAIM survey is nicer as it is a survey of active money managers, but it too can be volatile. Not to mention it has been above 90% since the end of November and this market continues to make new highs. II survey is the most consistent of the three and it has been super bullish for quite some time too. If you boil all of this down what you get is an unreliable indicator that is fun to quote. Price pays.
A nice start to the week for us here at Big Wave Trading. There is a full sell on a long with a signal date back in 2012! Talk about long-term gains. Come join Big Wave Trading and experience long-term success.
