The market had some giddy up during the early going as buyers were out pushing the market higher. Just as it appeared buyers would hold the upper hand in a flash the market erased its gains. Most notably were small cap stocks as the Russell 2000 came under heavy pressure. While the major indexes were able to recover from the intraday reversal the Russell 2000 was unable to come back from the selling. Volume was up on the session and given the price action in the NASDAQ we label today as a stall day. While not a big deal at the moment it is something we will have to keep an eye on. After such a large run up a stall day or a day of distribution is not out of the question. We are still a go in this uptrend and we will continue to manage our trading signals.
While a stall day like today could signal a market top we certainly are not about to call one. Underneath this market rally we have some excellent positive action. Stocks like CELG and a chat room favorite BABA have exploded as of late. There are a few others, but considering these stocks have had big moves it is a positive sign for this market. We would still like to see some resemblance of consolidation. This would help continue this uptrend with big winners. One potential leader BITA reports Friday morning and it will be a stock we will be watching Friday morning. Stick with the leading stocks for big gains in any uptrend.
We certainly have positives for this market but we are now seeing elevated levels of bullishness. AAII Bulls jumped over 5% finishing 57.9% for the week. Bears jumped too, but the percentage of bulls is still below 20% finishing the week at 19.3%. NAAIM exposure index ticked higher to 85% as active managers continue to add to long exposure. Unfortunately, they are adding to long exposure as the market is well into overbought territory. II Bulls inched higher to 55.5% while bears continue to slump finishing at 14.8%. We are seeing sentiment nearing frothy levels and certainly some consolidation will help cooling the jets.
Despite this non-stop rally we continue to find suitable trading signals. No need to overthink this nor do we need to outsmart the market. We need to execute and hop on potential monster stocks. This formula works. Another polar vortex is dominating much of the US. Try and enjoy the weekend!
