From the Trading Desk

Rally Continues as the Russell 2000 Leads; iPhone X Revealed

The biggest news event outside the devastation hurricanes have left over the past few weeks was the iPhone X reveal. A new iWatch series was released too, but the iPhone X was the biggest headline of them all. AAPL and the NASDAQ moved in tandem as traders and algorithms a like pushed around the stock. Telecom and Financials were the biggest winners in the S&P 500 with Utilities and Real Estate falling more than 1% on the session. Bonds sold off, but the 10 year yield remains well below its most recent highs. As we move into Wednesday’s action futures are pointing to a lower open. We do need to work off a little bit of these overbought conditions. Keep in mind an overbought market can stay overbought for longer than you can stay solvent. Stick with the trend and manage your risk properly.

There still remains to major themes amongst those who think this market is going to tank. For one, anyone at a cocktail party will tell you the market is going to tank because of Trump. Not out of the realm of possibilities, but since the election the S&P 500 is up more roughly 20% (total return). Small caps are up a touch more as well. Second, valuations are stretched. CAPE valuations are certainly stretched to a point where the 10 year total return for the market is abysmal. On a trailing twelve month basis the S&P 500 trades at a 21.37 multiple to earnings. Pretty high! Let’s not forget volatility remains low. At some point we will likely see these themes impact the market one way or another. For now, they are what they are and the trend is what it is. We’ll stick with the trend until we get signals otherwise.

We hope you have a fantastic day of trading. While opportunities may not be what you want there are opportunities to make gains. This market is not like the late 90s or the mid-200s. It is what we have. Adapt or die.

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