From the Trading Desk

North Korea Missile Launch Sparks Fear

After a relatively good day for the markets North Korea spoils with a missile launch. Futures quickly began to sell off as the missile proceeded to pass over parts of Japan. Seoul South Korea responded dropping bombs at the border, but this latest launch does have many worried what may happen next. Will the North Korean leader authorize a missile launch at Guam? Hard to guess, but for now tensions continue to mount and futures are currently reacting negatively. We are not about to guess what will happen next. We have our process and we are going to stick with what works and has worked for us. Our new longs for this morning should get solid fills and we will see if our stops are taken out. No need to fuss about what may happen with North Korea. If we can find support and our stocks avoid major damage there is no reason we will not find this market higher a week or two from now. Do not panic and work the signals while letting the noise from Wall Street go into one year and out the other.

Earlier in Monday’s session we did have some stops rip off suggesting we may not have a good day of trading. Volume was higher across the board which is odd for a Monday trading session. NASDAQ volume was up nearly 9% while NYSE volume rose 1.8%. The Dow was the only index trading lower as crude oil sunk to $46 handle on its trading session. Hurricane Harvey did not spark enough supply concerns for traders to push crude higher. It will be interesting to see how the market reacts here as we are in the last week of trading for the summer.

We are still in a seasonally weak period for stocks. Up until about the 2nd or 3rd week of October will we stay in this period where historically stocks have had a tough time. It isn’t to say we cannot rally, but we are not in a power position to really see gains in the market. Once this seasonality period has past we will be back in a power position. We’d prefer not to be out of position and risk too much eroding our capital. We are not trying to be heroes.

Futures now are pointing to triple digit losses on the Dow, but not a lot in terms of percentage loss. We will remain disciplined and execute our strategy with flawless execution. Focus on what matters and ignore the rest as background noise. Good luck to your trading!

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