From the Trading Desk

Morning Musings: Is the Stock Market Ready to Run?

After yesterday’s big market run it begs the question are we going to see another big market run? A big positive yesterday was IWM breaking back above its 50 day moving average. The ETF has been within a consolidation range for quite some time. It continues to hold its March lows avoiding a potential lower low. Volume wasn’t extraordinary yesterday and it was not higher than Wednesday so the move was not the greatest it could have been. However, we will certainly take the positive action. QQQs continue to look great and the ETF is poised at another run towards all time highs. MSFT and GOOGL report this coming Thursday. It would not take much from these giants to push higher. Yesterday’s action was certainly a positive development for this market and now we will need to see the market build upon the move.

Sentiment among the AAII survey continues to lean heavily towards neutral and bearish position. Bulls were at their lowest level since the election back in November. Prior to the election bulls dropped to 23%. Currently, at 25% the common investor simply does not believe in this market. We have seen in the past they are well behind the curve. II Bulls remain above 50% while Bears simply do not have any membership at 18%. Sentiment has been an imperfect indicator and given where we are at with the market it would not surprise us if we build upon yesterday’s action and move higher.

It is funny to see people trying to predict the market. Just yesterday I was being told the market was on the verge of collapse because of Trump. We heard the same rumblings because Obama was in office. Partisanship is a funny thing and while we may very well crash predicting when is useless. We prefer to use price as a guide. Look, we were very well positioned for yesterday’s move. Many missed it because they were too busy trying to game a market decline. Ignore the urge to think you know more than the market. It will only destroy your trading results!

Have a great Friday! Hustle.

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