From the Trading Desk

Stocks Finished Thursday Flat

Thursday’s market action was relatively non-eventful as the market finished near breakeven for the session. Volume inched higher, but normal as we are clear from summer vacation season. Hurricane Irma continues to be the focus even after the ECB’s president Mario Draghi stated QE will remain in place through December this year and perhaps beyond. He even stated they have yet to see any negative side effects from their program. This week did not get off on the right foot on Tuesday, but we haven’t experienced this market following-through on the downside. So far, we are digesting the gains we saw leading up to the Labor Day weekend. The next Federal Reserve meeting is not until the 20th of September and it would not be a surprise if we continue to see the market push higher until then. It is really anyone’s guess, but for now selling hasn’t gained any momentum. Stick with the plan and continue to execute with flawless precision.

Hurricane Irma is certainly a near term threat to the US as economy and one many will be watching. An incredibly strong earthquake just struck in Mexico and we still have the threat from North Korea. Let’s not forget the clean-up efforts going on in Houston right now. This market could have easily tanked and we could be well off our highs. We will simply follow our stocks and their price action. Many trade with their emotions and like many are a mess. We do not succumb to our feelings or opinions when it comes to this market as it leads to disaster for our portfolios. Leave the feelings and opinions behind. They are great for cocktail parties, but terrible for your portfolio.

Sentiment has eased off the bearish stance from a week ago. Those who are bearish in the AAII survey ended the week at 36% while neutral respondents remained strong finishing at 35%. The bulls ended the week at 29%. The obvious here was the 4% jump in bulls and subsequent decline in bears. Not a real surprise after what we saw heading into the long holiday weekend. Of course, that rally was on lighter volume, but price pays and we do not argue. NAAIM exposure index still shows active managers are exposed to the long side and continues to shy away from any bearish stance. Very interesting even after a little bit of selling.

This market is not going to make things easy on you. Stick with Big Wave Trading and we’ll help navigate the treacherous market waters.

We hope you have a great weekend!

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