From the Trading Desk

Stocks Add to Gains

Technology stocks led Wednesday’s market action as the NASDAQ Composite finished higher by more than 1%. The Dow lagged significantly behind both the S&P 500 and the NASDAQ Composite during Wednesday’s trading. Volume was mixed with the NASDAQ seen higher and lower on the NYSE. It was solid gains for the NASDAQ as it built upon Tuesday’s turnaround even after North Korea sent a missile over Japan and into the pacific. We are heading into the end of the week, month, and Summer. A bit of consolidation of the past two days would do this market some good. There are plenty of stocks setting up in good patterns and it would not surprise us we see the market shake off seasonality. The future is unknown and all we can do is react to what the market gives us. Focus on what matters and push aside everything else.

There is another negative people are beginning to point to regarding this market. Yes, we all know valuations are so high and the expected return over the next 10 years is VERY low. Expectations for the market from the crowd is minimal. Now, the noise is going to start over the breadth of this market. It is poor and it is obvious many stocks haven’t caught back up yet. We cannot think of a time in history where we have had these gains only for the entire crowd to hate them. This market continues to be the most hated in history. First, conservatives hated the market because Obama was in office and the Federal Reserve Bank was injected trillions into the market. Fast forward to today and liberals who cannot stand Trump think the market will collapse at any given moment. What a ride. It must be hard to deal with all those emotions and find out you just missed a massive run. Ignore the noise and trade what is in front of you.

Biotechs continue to be a group to keep an eye on. Plenty of stocks in the group are poised to make a run at higher highs. How high is anyone’s guess, but the group is acting well and producing decent charts. DOVA is a recent IPO looking to make a move. FOLD hit a new high yesterday. Keep an eye on the group as it will likely produce some winners if this market cooperates.

Semiconductors continue to be a group to watch. SOXL is looking good here moving off its 50-day moving average. NVDA is a stock that continues to obey its 50-day moving average. GPUs are a hot commodity with cryptocurrency miners. Look for more buyable patterns in semis as we enter the unofficial fall season.

The big boys like FB and NFLX continue to impress. These big stocks continue to perform. It is a positive sign for the market. Unfortunately, AMZN and GOOGL have lagged significantly splitting up the FANG stocks. AAPL sits at all-time highs with their product launch in a few weeks. Not great, but given how FB and NFLX look this market is setting up to make another run at all-time highs.

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