From the Trading Desk

Trump Bump Gains Continue; More All-Time Highs

The S&P 500 closed higher for the 7th straight time as volume expanded over Tuesday’s level. Trump once again hinted at a massive tax cut plan and traders cheered the development. In addition, Yellen’s comments regarding rate hikes helped push the odds of a March rate hike up to 63%. Odds of a June hike now stand at 79%. Small cap stocks lagged much of the day and it wasn’t until the after lunch time did the group seeing much love. Health care related names were the biggest winners on the session while interest rate sensitive names like Real Estate and Utilities finished lower on the session. Energy was lower too, but given the big build in crude inventories it was not a surprise to see the group lower. We continue to see a bullish tape and many underinvested traders. This trend remains strong and we continue to benefit greatly from it. Stick with it.

After this 7 day win streak it may be a bit difficult to find many stocks signaling a new long. We definitely had some stocks hit our profit targets triggering a few exit signals. We will continue to adjust our exits as this market pushes forward. One thing we have benefited greatly from is ignoring the noise produced by the financial media and pundits. Price dictates what we do and we are going to avoid allowing emotions and other people’s opinions influence what we do with our portfolios. Many times traders think they know better than the market and get into trouble. For us, it is simple. We have our strategy along with strict money management principles. These two things are vital to our success and why Big Wave Trading has existed for more than 10 years. Not too many services are able to have this type of longevity. Gain from our experience.

We would absolutely enjoy a few days of consolidation where the market pulls in on very light volume. Unfortunately, for some reason this market wants to continue to push higher. The reason potentially could be tax cuts coming or even infrastructure spending. Banks will benefit greatly from higher rates, but all we care about is this market continuing to act normally. Earnings season continues and we’ll be continuing to pay attention to when our stocks report. If our position sizes are not in-line with our risk model we’ll simply reduce our size. We do not want to be over exposed and risk losing valuable capital.

Let’s see where this market takes us next. It has been a great ride so far.

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