From the Trading Desk

Dow Closes up 9th Day in a Row; 11th Record Close since Inauguration

The Federal Reserve hints at another rate hike helped elevate the Dow to more record highs during today’s session. Small cap stocks lagged the broader market, but continue to remain in its general uptrend. Volume was lower across the board as the S&P 500 and NASDAQ closed lower. Energy was the worst performing sector as both crude oil and natural gas have been weak. Utilities were the leading group on the session followed by Materials and Information technology. Utilities added to their gains today as volume continues to push higher for the group. Most are trying to fight this market and we continue to embrace it. We are not going to fight this momentum we have and there is no way we are going to exit the party too soon. To those who have been along the ride have benefited greatly and it has paid to follow this trend.

The Federal Reserve meeting minutes from their most recent meeting showed the group of central bankers is still hell bent on raising rates. They have cited Trump’s polices as a reason to hike rates. Rate hike odds for the March meeting continue to stay around 30-35% with odds ending the day at 34%. May odds of a hike are nearly 50/50 with 62% odds of a hike, but odds are a hike will be at the June 14th, 2017 meeting. Things will certainly change from now until then, but it appears the US central bank will hike rates prior to the beginning of the summer. What that will do to stocks is anyone’s best guess, but for now all we are witnessing is this market continuing to hit all-time highs.

There is no question about it we are seeing an unprecedented market. However, let us remind you this entire move off the 2009 lows has been quite remarkable. All we can do is simply follow the immediate trend in front of us and let others bloviate over the direction and market happenings. While many enjoy this banter it simply does not add any value to us. If you want to feel smart be our guest. Just know that it will not help you add to your bottom line. Do what is necessary to win and ignore what does not.

Volatility remains quiet as the VIX continues to remain below a 12 handle. Traders are not simply expecting volatility to pick up over the next 30 days. Can’t say we blame them given the rise in the Dow, Nasdaq, and S&P 500. One could argue complacency and we are due for a snapback at any moment. It is a nice argument, but we have been unable to do so for quite some time. The best, most optimal course of action is have your exit plan in place and let your winners ride. When your exits begin to trigger you will know it is time to get out and regroup. Keep it simple.

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