From the Trading Desk

Volume Ticks Higher; Stocks Post Small Losses on the Day

Thursday’s action was another relatively smooth day for the markets. Volume was higher, but losses were contained. Avoiding distribution here is key for the markets. Friday’s session traders will await comments from ECB President and if more QE is on its way in Europe. Futures are pointing to a higher open as we continue to move sideways. If we do not make new lows with heavy distribution we will likely see this market return to hitting new highs. Key is to remain patient and do not try and be a hero with this market.

Sentiment has turned bearish with the number of AAII bears hit 38%. Perhaps a week late, but the group of individual investors do not see a good outcome over the next 6 months. Bulls ended the week at 28%. Neither bulls or bears ended the week at extremes. We haven’t seen extremes in quite some time. NAAIM exposure index is inching lower, but remains well exposed to the long side of the market. The exposure index did not report any bearish bets for the past 8 weeks.

This commentary is going to be short. We remain in a consolidation period. We have seen quite a few new longs over the last few days. It’s at the very least a positive sign this market could very well rally here. We hope you have a great weekend. It’s the last one prior to Labor Day!

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