From the Trading Desk

Friday Morning Cup of Joe: Stocks Rally to Close August

August was a fun month for stocks after a nice ride in July. While it was rough going for some the market held on and salvage the month rallying up until the last trading session. Small cap stocks continue to be a weak spot and is a key watch area going forward. Given the weak seasonality period the resilience of the market should be noted even heading into the historically weak post Labor Day in the United States. It pays to stick to price and price alone when you have pundits bloviating over the latest fad in the market. Despite all the negativity and disdain this market has endured we are still sitting near record highs and poised to continue the win streak. Stick with the trend and always cut your losses small.

AAII Sentiment Survey showed bears nearly clip the 40% market. Sure, we can round up from 39.9%. It is not a surprise to finally see the number of bears jump to those levels after the market we have seen. The crowd is easily spooked and they certainly listen to the noise Wall Street generates. NAAIM exposure index has its lowest equity exposure in months as active managers have trimmed their equity positions. What is still a little intriguing is the fact that there is not one bearish bet in the index. Typically, you do see the bearish column with something. Currently, we do not have anyone in the NAAIM who has a bearish bet. Interesting to note.

Semiconductors continue to be a hot sector with NVDA leading the way. By far the best chips out there when it comes to GPUs. There are others in the group performing well, but NVDA is number one. Biotech stocks are another area to look out for as IBB hit a high yesterday. Do not go and chase stocks extended from proper buy points. It appears semiconductors and biotechs have some juice to run here.

Heading into the long weekend we hope everyone gets a chance to enjoy themselves. Fall is just around the corner.

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