A great day for the markets as the Dow surges ahead with volume pouring into stocks. Volume was higher across the board as the Dow Jones Industrial Average surged nearly 300 points. The laggard of the session was small cap stocks with the Russell 2000 finish higher by 88bps. Telecommunications was the leading sector in the S&P 500 while Healthcare was the worst performing sector on the day. Trump vowed to clamp down on drug prices much like Clinton and others and of course repeal and replace continue to cast a shadow on the sector. A solid session all around and we continue to see those following the trend rewarded for sticking with it. We will continue to search for new long ideas while managing our current portfolio of stocks.
This is not an easy game, but when you have a solid process of piling onto winners and cutting losers you will come out on top. We are in unchartered territory as far as monetary policy and what it will mean for the markets. We can make many guesses, but in the end all we can trade is what we see in front of us. For now, we have an uptrend with solid price action for majority of the market. Of course, Healthcare names aren’t quite there. Stick with Big Wave Trading as we continue to provide our subscribers with tremendous opportunities to grow their portfolio.
Energy was a laggard today as well. Crude oil has pulled off its high after OPEC reached its production quota accord. However, it appears the market may not be buying each member will hold to its agreement. Not to mention as price remains above $50 many shale producers and other rigs come back online pumping as much as they can while they can. Until world demand for oil and the current glut is removed it is unlikely we’ll see much upside from here. With current prices back under $50 the current pattern continues to play out. Until we see a break in its current patter it appears crude oil is locked in a solid trading range for now.
Back to healthcare the worse performing area is Biotechnology. Given the sensitivity around pricing of drugs many are hesitant to plow money into many biotech names. At some point this will turn and we’ll be out in front when the market does turn and push higher.
An interesting tidbit for today was the VIX moving higher by more than 3% on the session. On a day where we close in another all-time high the move in the VIX does give some pause that this market may be on the verge of consolidation. It would not surprise us to the S&P 500 take a breather after such a huge move in new all-time highs.
There is not much to be bearish about ahead of next week’s Federal Reserve meeting. A week from today we will likely see the Fed Funds rate 25bps higher with a market digesting the news quite well. Time will tell, but given how the market is moving here it is very likely we will take the rate hike in stride. Keep grinding and as always keep those losses to a minimum.
