Led by small cap stocks the market jumped higher again. The Russell 2000 gained more than 1.25% on the session while the Dow gained 153 points. A nice start to the week and quarter. Volume edged lower, but no real surprise there. We have a market that may be a little stretched in the near-term, but overall this uptrend looks very good. We may see a brief consolidation period, but price action is suggesting we will continue to march higher. There is no need to argue with the market here and we will continue to ride these gains higher. A very good start to the week.
Small cap stocks are anticipating a huge win via tax reform. We are not going to get into a policy debate, but all we know now is the Russell 2000 is on fire. Yes, the move was a v-shaped move and a pattern that is not the greatest of patterns. However, in this market environment it has done okay. Financials continue to do well, but for a different reason. Higher rates certainly help lenders. Biotechs continue to act well as IBB is at a new high. There are enough leaders in the clubhouse here we can take advantage of quite a bit. It is up to you whether you want to participate in gains.
It would be nice to let the market cool off a bit and not get overheated. Of course we can only trade what is given to us. We could very well see this market continue to march higher. All we can do is obey our signals and move forward. Controlling our risk through position sizing and stops help us minimize losses while maximizing our profitability. We will continue to operate this way until we are no longer on this earth.
We hope you have a great trading week. A great start to the week. Now, we are looking to finish up strong.
