Coming off the long week the market started the week on the wrong foot. Sellers dominated much of the day. Volume was up across the board as the NASDAQ notched a day of distribution. Perhaps the real tell of the market were financials as regionals and large banks weighed heavily on the market. Bonds rallied along with Utilities. Financials have had a heck of a run and have yet to really succumb to any selling pressure. Biotech stocks were hit once again as Trump fears continue to weigh on the group. All we could say in the chatroom was this day could have been a lot worse than how it ended. We could have seen the levy holding back sellers break wide open and been witness to a very nasty sell off. This market has stayed quite resilient, but we are not going to take too many chances with our hard-earned capital. We must protect our capital at all costs. While today could have been much worse we are still very keen on our exposure to the downside.
We have not seen any type of correction in quite some time. In fact, the Dow prior to today was in its tightest trading range over a 21-day period in its history of 1.07%. At some point, we will break this consolidation period one way or another. Tough to really tell which way we’ll break. There have been a lot of hedge funds positioning themselves for a sell off post Trump’s inauguration. We are not going to guess when the market will sell-off. The “professionals” can handle that. We will stick to our price signals and money management process.
Not the start we would have liked, but it is what we have. We will make sure our stops are where they should be and let the market go where it will go. Stay tuned and have a great week trading!
