From the Trading Desk

Tuesday Morning Drip: Uptrend Continues with Dow at All-Time Highs

The Dow Jones Industrial Average continues to benefit from earnings as the index once again hit an all-time high on Monday. NASDAQ 100 struggled with AMZN struggling. AAPL reports Tuesday after the bell and should have an impact on Wednesday. Tuesday’s trading will deal with all the first of the month economic data, but we gather the market will not care so much about it. Jobs report is this Friday, but will likely lead to some volatility. For now, our uptrend remains in place for the Dow and S&P 500.

The NASDAQ 100 is looking a bit shaky up here. The past two months the QQQs have quite the distribution while the Dow and S&P 500 continue to blast ahead. SPY has had a bit more selling than the Dow, but for all intents and purposes the trend is still in place. It could very well be money continues to move out of big cap tech and back into the banks and energy.

GOOGL and AMZN are looking very weak after earnings. On the flip side FB and NFLX are still hanging tough after their respective earnings reports. Earnings across the board continue to be better than expected. Investors are paying higher multiples as trailing and forward earnings multiples are stretched from historical norms. Perhaps we are in a new world where multiples will stay high. We certainly do not know the future despite many others claiming they do. We have our exit strategy in place when the market decides to turn against us.

Seasonally speaking we are entering into the most difficult period for the stock market. It does not guarantee we are going to fall flat on our faces, but we must keep this in mind with our risk management practice. Without a backstop in place to protect our capital we will be way over exposed to the market and potentially damage our portfolio.

We are looking forward to the last full month of summer. Hard to believe it has come and gone. We hope you have a great week of trading.

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