From the Trading Desk

Dow Makes it 10 Straight; Technology Hit

For the 10th straight session the Dow has notched gains while technology stocks finally see a hint of selling. It has been one heck of a ride for stocks since Trump’s election. Most will attribute it to tax cuts and perceived inflation fears as the Fed is set to raise rates 3 more times this year. We simply do not care and rather focus on what matters the most. Occupying our minds with the “why” will only cloud our judgement and we cannot have our mind cluttered with junk. Even with today’s selling in the NASDAQ both the composite and 100 indexes held their respective 10 day moving averages. Hard to believe or not, but we have a market that simply does not want to succumb to a ton of selling pressure. We will continue to focus on what matters most and that is price and risk management. Everything else is just noise.

It is quite normal for a market to see intermittent selling. What we would call digesting gains or consolidation. We just have not seen this market sniff at consolidation just yet. We can hardly see the market sell off for heaven’s sake. This is what you get when you have such a strong market. Now, we do not believe this will last forever. Some new traders will like think this will go on forever. We know better through our experience. At some point, we’ll hit a rough patch and this rough patch will certainly separate the men from the boys. Our exit strategy along with our sound money management process will keep us afloat and in the game for the next trend.

AAII sentiment continues to favor the bulls, but just barely despite the amount of bullishness amongst professional respondents to the II Survey. 38% of AAII respondents are bullish and it certainly isn’t a large amount when you consider the II. NAAIM survey is above 100 for the first time since December. Hard to blame active managers to be overweight and even on margin on the long side of the market. The question is will these managers get scared out of their positions quickly. It is anyone’s best guess, but will be interesting to see.

Not a bad week and we’ll be looking to close out on a high note during Friday’s session. Keep grinding.

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