Another day and another positive day for stocks as the market is right back where it started when the Fed raised rates. Volume remains below average, but price certainly has improved after last Thursday’s and Friday’s action. All day long any dip was met with buyers, but traders were not piling into the market like we have seen in the past. Subsequently, the rise in stocks has smashed the VIX back to a 15 handle. We are still in a cautionary pattern as we are now getting into short-term overbought territory. A few days of consolidation would do this market some good along with leading stocks breaking out with volume would be a huge step forward. We are not about to overlook the potential we could rally here despite how thin this recent rally has been. If we are to move higher we will be ready and if we fail we have our exit plan and hedges. Have a plan and execute!
Tomorrow will be the last trading day of the week with the Christmas holiday on Friday. Volume will likely be lower than today’s session. It will be hard to put a lot of emphasis on a day where volume is going to be really light. In fact, a small pull back would be good. Breadth has to improve as the Arms Index (TRIN) is signaling a very thin market. If we continue to see a thin rally the odds we revert to lows will continue to increase. Keep an eye on breadth and if it improves it would be a good sign for this uptrend.
A Dow darling took it on the chin today. NKE has been on a tear as of late, but it abruptly stopped today. Initially, the stock rallied after reporting earnings on Tuesday evening. Sellers quickly took to the market and hit the stock hard. Volume was gigantic indicating funds were unloading the stock into the earnings. Today is certainly a warning sign there is trouble at least in the short-term for the stock.
A quick look at the FANG stocks and they are all relatively quiet. NFLX continues to look good as volume within the recent decline is drying up. Nothing new from FB, AMZN, and GOOGL. Keep an eye on these stocks as they are our four horsemen of the market.
TXMD and JRJC continue to act well and are great plays intraday. There is opportunities all around us and if you have the time during market hours these intraday plays can add to your bottom line.
Keep grinding as this market will cough up gains sooner or later. Keep losses small and take profits where warranted. Have a great long weekend ahead.
