After a good start to the week stocks take a break pushing higher. Small cap stocks were up more than 1% on the session, but could not hold onto gains as the index closed well off its high of the day. Volume was mixed as NYSE volume was higher on the session while volume on the NASDAQ exchange fell day-over-day. The VIX closed the day a bit higher, but still with a 10 handle. Fear simply does not exist in this market. The big headline of the day was of course Trump’s tax cut plan. We are not here to debate whether it is good or bad. What we are going to do is react to how the market moves and given the context of this week today’s session was not all that bad. It would be good to consolidate Monday and Tuesday’s gains as we head into next week’s Federal Reserve meeting.
Next week we’ll get another Federal Reserve meeting and the hype that goes a long with it. We still need to contend with end-of-the-month rebalancing at the end of this week. Volume will certainly be large at the end of the day Friday. Next week will be interesting as many Federal Reserve watchers will be keen on if the Fed will indicate in their statement whether or not they will extend rolling over maturing holdings. At the present time, the Federal Reserve reinvests the cash into new debt. A move away from this practice will be seen as a hawkish move thus removing liquidity to the system. It will be very interesting to see how the market reacts to the Federal Reserve.
We still have two days left this week and the rest of April. It would be great to see volume subside tomorrow knowing full well Friday will be huge and price simply consolidate in a reasonable manner. We still remain quite long this market, but continue to manage our stops to protect our gains. There is no need to lose any of these great gains we have had these past two days regardless if they are sustainable or not. We do not want to lose our hard earned gains!
No need to get fancy here by any stretch of the imagination. While others will get cute with trying to pick a top we are going to continue to execute our strategy. By getting cute with trying to pick tops you will at some point cause more harm than good only to lose your hard earned capital. Enjoy Thursday’s market!
