Following an upbeat European open, US stock futures pointed towards a higher open. Buyers began to step in from the start scooping up shares of stock after last week’s “risk-off” trade subsided. Many of our stock market leaders we have identified acted very well during today’s trading session. By mid-day however the market hit a slump and pulled back. Despite a valiant effort heading into the final hour the market simply couldn’t sustain the highs of the session. Volume was higher across the board indicating institutions were in the market today accumulating shares. Today’s move, while subdued by the end of day action it was still positive given the price move overall.
The move in gold was quite a disappointment falling two percent on the day. Sometimes these trades simply do not pan out and when we are wrong we must cut our losses. It doesn’t mean the next signal we get from gold should be ignored. We simply cannot predict the future and hanging onto losses will eventually bleed our capital dry. Dry powder is needed when trading the stock market and it is this “powder” that gets you to the big winners. Capital preservation is part of the game and it certainly is one of the most important aspects of trading. Learn to cut your losses and move towards what is trending!
Our leading stocks are acting well today a good sign for this market overall. There are many who are trying to pick a top just because we are near new highs. Last week we saw many folks jump to the bear camp and we were really never more than 3% off the recent highs. There were plenty of momentum stocks well off their highs, but from an overall market stand point things were held in check. It is important to be able to identify leadership like PCLN, GOOGL, FB, TSLA, and NFLX. Look at NFLX’s week last week, looked rather ominous and scary. However, it has rebouned so far in higher trade. The best course of action is having a sound trading plan and sticking with Big Wave Trading. We know how to identify potential big winners and ride them for big gains.
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Today’s session was a good, not great way to kick off the trading week.
