March kicked off with more new highs and the NASDAQ Composite index closing above 5000 for only the third time in its history. The last time the NASDAQ was at these levels was March 2000! All-time highs for the Dow and S&P 500 is not a bearish signal, but many will be entering the short side looking for a market top. Volume ended the day mixed, but Friday’s end-of-the-month volume skews the picture a bit. Today was bullish and there are no two ways about it. We have not seen a pile up of distribution nor extreme overbought readings. Until we begin to see signals of a potential top we will continue to execute on the long side of the market.
We will not be surprised if the NASDAQ takes a breather here as it is up quite a bit since January. This does not mean we are going to jump into SQQQ because we hit new highs. New highs are bullish! Now, after a period of new highs yes we will ultimately get a top. Why risk getting run over? It is the same as trying to swim upstream against the current. If leadership starts to wane and distribution piles up along with leaders falling it will be a sign to reduce exposure. There is absolutely no need to think you can pick the absolute top. You will fail.
As far as distribution goes we do have 3 days on the S&P 500 and 2 days on the NASDAQ Composite. Where we would get concerned if we distribution piles up to 5 or 6 days over the next week. Is it possible? Sure, but at this point we simply do not have the evidence suggesting a top is near. Leading stocks continue to act well as a whole and our market indexes continue to hit new highs. Keep it simple.
There were a couple of stocks disappointing today. CYBR and VDSI in a hot sector both had troubles today. CYBR was on high and tight watch, but after the past few sessions it is becoming less likely we will see this stock setup in this powerful pattern. We are in a ZIRP/QE world so anything is possible. VDSI has been a big winner by the past few weeks the stock has been erratic and breaking down on big volume today. These two stocks are not the norm, but outliers.
Keep this simple and do not try to outsmart this market. Simplicity wins in this game. We have an uptrend and stocks making new highs. This is a bullish condition and will remain bullish until it is not. No sense in trying to predict the top and look foolish. Remember when September 2014 was the top? Sure, October looked bad, but now we continue to hit all-time highs. Do not look foolish and win with Big Wave Trading.
