The market entered a historically weak period with sellers winning the day. Leadership thinned even further today. Leading the market lower was once again small cap stocks followed closely by the NASDAQ Composite index. The Dow Jones Industrial Average continues to hold up, but it is likely a sign of traders fleeing to blue chip stocks. Existing home sales disappointed as the sales rate was negative month-over-month. As we are in a historically weak part of the calendar this selling does not come as a big surprise. We continue to be fluid with the market and as our signals trigger for us to make moves we will. It is not what cards you are dealt, but how they are played.
Here is an interesting quote:
“The only true wisdom is in knowing you know nothing.” – Socrates
There are so many “gurus” out there just remember this quote. Once you are able to let go your bias and simply follow price your trading performance will improve dramatically. Gurus want you to believe they are smarter than the market. How are those permabears performing these days? Sure, we will see some sort of consequences for printing trillions, but until the moment comes why miss out on gains?
One of the most important things this market has going for it is the Federal Reserve. Rate should remain low until mid-next year and QE is set to end next month. Given rates will be low till next year it will be somewhat interesting to see how the market reacts to the end of QE. While a long term bear market is not likely until we see rates rise it is not out of the question we see the market adjust to life without QE. The uncertainty around the ending of QE simply does not bother us. Our process allows us to ignore the noise and follow our price signals.
A few of our market leaders continue to break lower. NFLX, TSLA, and BIDU all experienced heavy volume selling. They could certainly turn things around. For now, the selling in these names continues to be a red flag for this market. There are a few stocks out there looking to form bottoms. A few coming to the forefront are WAGE and FEYE. Will they turn and run higher is anyone’s guess. However, at the moment they are exhibiting positive price action.
Despite how tough this market may appear we are reminded why we are here. Big Wave Trading exists solely to make our subscribers better. We thrive on hearing our subscribers succeed. Our time tested process continues to be a winning solution. Give it a try.
