From the Trading Desk

Morning Musings: Last Friday’s Commentary on the Money

Last Friday morning we wrote commentary regarding how the market was poised to run higher. Was it luck we were so timely with the post? Luck is where preparation meets opportunity. We have been quite long this market for some time only because price action and our risk management process had us long. Not because we are market gurus, but because we are consistent and follow price and not what our opinion is of the market. Ego is a terrible thing in the market as it will humble you. Click here to read the commentary from last Friday.

The NASDAQ 100 continues to dominate all the other indexes as once again the QQQs hit another all-time high. We can debate all we want about valuations and how they matter, but the QQQs keep marching higher. How long it lasts is anyone’s guess, but so far they have been dead wrong. SPY and DIA continue hover just below their all-time highs, but are on the cusp of doing so. Many bears will point out both are in a double top formation, but until we see a failure here we are not about to “call” a market top. In fact, we will never call a market top regardless if we may think there is one. Thinking is very dangerous as it allows opinion to creep into your decision making. Keep a clear mind and simply focus on the process and maintaining a strict risk management process.

Sentiment jumped on the AAII survey as 38% of respondents are bullish. Given Monday and Tuesday’s action it is really no surprise to see Bulls jump to nearly 40%. The NAAIM Exposure Index finished at 89% up from 71% last week. In March we saw the exposure index above 100, but active managers have soured on the market a bit over the past two months. Expect further consolidation of this move we saw earlier this week given the jump in sentiment. Be sure to have proper stops in place.

The NASDAQ once again will be higher today thanks to earnings from its big names. GOOGL, AMZN, and MSFT reported Thursday evening. GOOGL and AMZN are both up around 4% as this is being written. It should propel the NASDAQ to new all-time highs once again. There is no need to fight this market. Stick with the trend. Have a great weekend!

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