From the Trading Desk

Gains Continue but Volume Falls

An impressive comeback by small caps as Biotech’s lift off morning lows with the broader market moving higher. Volume struggled to eclipse Wednesday level, but price gains were once again solid. Biotechs struggled for much of the session. However, the group found buyers lifting the group off the lows of the session above the mid-point of the day. The GOP Healthcare bill likely spooked traders, but the price action remains bullish for the group. After the recent gains, it would be nice to see the market take a day or two to rest. Not a bad session and the market is poised to continue its gains ahead of earnings season.

It should come as no surprise the AAII investor survey shows most of its respondents are neutral. 42% of the respondents were neutral on the market over the next 6 months. 30% were bearish where as 28% were bullish. Not exactly sentiment you need for a market top, but then again this is a different kind of market. NAAIM exposure index ticked down to 89%. The index is still near 90% where it has been for quite some time. We can’t say we blame active managers for sticking with this market. It has rewarded those who have stayed long. For how long is anyone’s guess. It is best to have an exit strategy in place and see where this uptrend takes us.

There are plenty of every day folks who believe in their hearts the market is going to crash. Most cite Trump, but it is quite amazing the number of people who believe it. We really do not care “why” a move may happen, but that it does happen and we take full advantage of it. Shorting is a different animal and is very difficult to master. Besides, your max upside on any one trade is only 100%. The long side is infinite (theoretically). Why want the market to crash? We would much prefer this market continue marching higher and us pocketing the gains. Let others do all the thinking while we read and react to price action. Perhaps they will be right, but at least we’ll make money.

We hope you have a great weekend! Get out there and enjoy it.

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