From the Trading Desk

Thursday Morning Brief: Divergence Appears

Yesterday’s trading action was not precisely what you would like to see out of this market. First, it was nice to see support at the morning lows and for the market to shake off sellers. However, internally our portfolios saw a lot of weakness. Small cap stocks suffered it the worse ending the day down by more than one percent. AAPL did its part to hold up the broader market as the stock could close in the green. Unfortunately, the stock finished the day well off its high. Troubling was the action in our stocks giving us an indication troubled waters are ahead. Anything is possible and we will continue to monitor our stocks and the market. There is no need to be a hero and act outside our trading process. Be methodical and deliberate, but don’t act on impulse.

What is next in the market is anyone’s best guess. We have had one heck of a run since the November 2016 elections. At some point, we will have a correction. I know it may not seem possible as we continue to march higher and higher. We very well could just continue to march higher. Given seasonality in front of us there is a good chance over the next 1-3 months the market trips up. Some will want to see a crash as others will be caught blindsided. We will continue to operate as we normally do and simply follow our price signals. It has never made sense to us to sit and spew garbage just to attract attention and trying to look smart. Our approach is simple. We follow our process and leave the noise for others. Wall Street is great at making noise and distracting you from what really matters.

TSLA reported earnings after the bell and is now up 22 points. Sure, it is early and anything is possible. The stock continues to defy the naysayers. Yes, it was looking like a short setup. Remember, heading into earnings you never want to be caught with your pants down. Wait for earnings to pass and we did on TSLA. We could certainly see TSLA fall flat on its face today by reversing and closing near its lows. Better yet, the stock can form a new base for us to get long. In any event, the stock is moving higher from what it appeared like lower prices.

We hope you have a great day of trading today. Cut your losses short!

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