From the Trading Desk

Quiet Trade to Kick off Week

A nice solid day of consolidation kicked off the week’s trading. Volume subsided by more than 10% across the board as stocks put in a day of much needed consolidation. There is no question we are a bit overheated, but days like Monday do help in relieving the pressure. We may stay overbought for quite some time and will stay overbought longer than many shorts can stay solvent. Energy and Information Technology stocks were the leading gainers yesterday with Healthcare and Industrials pulling up the rear. Small cap stocks led the decline, but the index is working off its long run since the middle of August. Not a bad session for stocks and one that was certainly welcomed. We will need to see this type of action continue if we want to see this market push higher.

Financials were down on the session yesterday, but they like biotechs and semi-conductors look solid. Odds are above 80% the Federal Reserve raises rates at its December meeting helping financials. After the December rate hike the market is not quite sold on when the Fed will raise rates next. Expectations are with higher yields Utilities and Real Estate will struggle. We’ll let price action take care of itself here rather than guess what the market might do next.

Futures this morning are higher. Crude oil futures are back above $50 a barrel. It does appear the market will overcome yesterday’s losses. NVDA continues to act well as the stock approaches all-time highs. Artificial Intelligence is help driving the need for faster processors. Of course mining for cryptocurrencies has helped. It is hard to ignore the sector as even INTC has joined the multi-decade high club. The stock does have a ways to its all-time high set in September of 2000 of $75.81. All-in-all not a bad time to be in the market even if gains aren’t what they used to be.

We still have a mix of those who say the market is going higher versus we are going to collapse. Over the weekend there were more articles out justifying the market going higher, but we still lack the exuberance from the crowd. Assuming the great divide in politics may have something to do with sentiment, but who really knows for sure? All we will focus on is what signals we get and control our risk. We cannot control what the market does nor what anyone does but ourselves. Focus on what matters and in your control.

We hope you have a great week!

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