From the Trading Desk

Stocks Close Flat as Small Caps inch out Gains

Returning from the weekend the market did get off to a mixed start, but also ended the day mixed. While the Russell 2000 was flirting with a breakout it simply did not have the muster to close at a new all-time high. Earnings season has ramped up with NFLX reporting after the bell and GS tomorrow morning. This market could use a day or two of consolidation and today’s session for the most part was close to a day of rest. NYSE volume was higher than Friday’s level, but NASDAQ volume fell. All-in-all not a terrible way to start the week off, but it could have been much better. It’s the same ole story of this market.

So many are being chased from this market because they are trying too hard for the market turns. Even so-called gurus are calling bulls foolish for being long the market. We have no idea whether this market is going to go parabolic or crash. Look at Small Caps they have been consolidating for 7 going on 8 months! Sure, if we break lower it will be bearish. However, now IWM is knocking on new high territory. We prefer to follow our stocks and be ready for anything. What has not paid off is impatience and trying to top tick this market.

Another interesting development has been over cryptocurrencies. There are a lot of bulls who are jumping back in calling a market bottom. After the parabolic jump in BTC, LTC, and ETH they have fallen and while dead cat bounces happen they tend to wipe out those who are careless. Cryptocurrencies work because they are decentralized. No central authority and eliminating transaction costs make them highly sought after. Cutting the middleman out of a transaction always leads to lower costs for the end consumer. We will keep a close eye on how BTC, ETH, and LTC behave.

NFLX reported earnings after the bell and is up more than 10% in after-hours trading. GS reports tomorrow morning. FAS is setup in a flag pattern and given how support has come in after bank earnings last week there is a good chance we see higher prices. Also, it is a good time to review when your stocks report earnings. Without a solid buffer, it is wise to step aside and not get hurt by a stock falling 10% on earnings. We have seen this quite a bit with stocks falling like a stone after earnings.

We hope you have a great week of trading and hope you enjoyed your weekend.

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