From the Trading Desk

VIX Continues Slide; Stocks Higher

Another day of gains and despite a late afternoon bout of selling the market was able to hold onto its gains for the session. Russell 2000 finished the day as the leader in the clubhouse with a gain of 65bps, but the index has not been able to join the big boy indexes in new high territory. Volume was fell off a cliff, but it was expected after Friday’s options expiration. We continue to see positives from this market, but we are stretching the limits in terms of being overbought. Given the Federal Reserve starts their two-day meeting Tuesday concluding with their statement at 2pm on Wednesday anything is possible here. I would not expect much market movement until the statement is released. Regardless of what might happen we have new longs still trickling in, but we are not ignoring protecting our backside. It is important to have your exit strategy ready to lock in gains. There is no telling what this market will do next.

The VIX continues to slide closing Monday’s session with a 9 handle. It would not surprise us to see the VIX continue to fall over the next few days. Fed days are always tricky and you just never know what you are going to get out of the day. It would not be out of the question for this market to continue to rally the rest of the week sending the VIX even lower. TVIX and UVXY will certainly continue their march lower if we continue to see this market hit new all-time highs.

There are so many people hoping and praying they see this market collapse. We would love a proper correction for these stocks to start acting more like they used to. However, we cannot trade the market we want nor force the market to succumb to our wishes. Trade what is in front of you and avoid trading what you want the market to be. So many traders fall into this trap. The first trap happens to be they believe they are going to double, even triple their money in the first few months of trading. This is simply not the norm and those who claim they do are statistical outliers. Those who are consistent and disciplined following a few simple rules over time can build a large portfolio. It takes time and patience. Most do not have these traits. It is why we exist and why we have been around since 2007.

We hope you have a great week of trading. Wednesday should be the day full of fireworks. Enjoy the week!

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