Early morning futures were screaming higher on the back of the global rally. The rally stayed strong throughout the session and kicked into overdrive during the final hour of trading. Volume ended lower across the board, but remained above average. During the final minute of trading there was something quite funky going on with SPY. SPY moved more than 6 points in less than a minute only to push back lower. Aside from the odd action in SPY the day finished strong without volume. After a strong two day move this market has the ability to push back into new high territory.
Sentiment sure didn’t get spooked from the recent selling. Bulls took a hit, but remained in control. NAAIM exposure index dipped to 65%, but the highest bullish bet was still 200% long. AAII bulls landed at 38.7% down 6.3 percentage points. Bears jumped 4.5 points to 26.9%. Even with a sharp decline bulls did not waiver too much. Perhaps a bit more telling may be the lack of bears. Given the pop the last two days do not expect to see Bears push higher.
Regardless of how we proceed further it is paramount you remain vigilant with your trading process. We at Big Wave Trading will continue to execute our trading process. If this market takes a break, pushes higher, or rolls back over we will succeed. Not getting emotional will allow us to avoid common rookie mistakes. The minute you think you know where the market is headed will only bring you pain.
Get out and enjoy the final weekend before Christmas. Enjoy option expiry!
This kind of market can eat bulls and bears indiscriminately. The trend is your friend, if you can find a trend.
This is still a very overvalued and overbought market. My experience tells me that it will come to either a nasty end or a nasty correction. In the meantime, it continues to move higher with little setbacks along the way. I’ll still buy the dips, but in smaller amounts. Eventually, that will stop working. So while I limit my gains, I also minimize the eventual big loss that’s bound to occur at some point.
jim –
excellent points. when does this end? many cite the 5 years of this rally, but the spx did correct 20% intraday back in early october ’11.
spx trades more than 18x earnings…historically high, but we do have historically low interest rates. it will likely take extraordinary event to knock this rally off its rocker.
Yes. We are being careful with our long positions by taking smaller sized positions and keeping tights very tight, despite the very bullish overall nature of this tape. My biggest issue is the lack of bears. Everyone “knows” we are going higher. I play price only but I wish there were more bears out there. Still I like that everyone, including me, is hesitant on trusting this rally. Probably means we have much further to go. Aloha Jim. Have a great rest of your weekend!