Despite some intraday fireworks, it was crude oil stealing the show falling to new lows since OPEC announced its production cuts. The Dow Jones Industrial average fell more than 100 points on the session as crude headed towards its day’s low. Even as the market looked like it was in free fall buyers stepped up and support flooded in pushing the market back to breakeven. We continue to see this market find support. The NASDAQ 100 remains the king of the hill as the index continues to hold its 10 day moving average. Russell 2000 is hanging around its 50 day, but the index continues to be the laggard. We still have quite the interesting market and while we remain long we have our stops in place to hold onto our gains.
Sentiment remains slanted towards bullishness as the AAII survey still shows bulls just under 40%. Bears remain under 30%, but given this market does not like to pullback it does not come as a surprise. NAAIM Exposure index fell as active managers trimmed their long positions. We have yet to see any extremes from the AAII survey while the NAAIM and II indexes had seen their numbers at or nearing their respective extreme. We expect sentiment to continue down this path.
At some point, it would be nice to get some sort of correction. Many are looking for this market to fall simply due to the President of the United States. Sure, we could see the market fall because of one guy. Or we could see it fall because we haven’t had a real 20% correction since the 2008-09 stock market crash. The Federal Reserve changed the game with 0% interest rates and a massive QE program. There is a lot of money floating around the market. As the Fed raises rates its pulling liquidity, but there is so much of excess money it will take some time for the market to notice. At some point, we will get a correction, but we are not about to guess when it will happen.
We hope you had a great week and we hope you have an even better weekend.
