From the Trading Desk

Trick or Treat: Its been all Treat this Month

Stocks look to close out the month in positive territory after a good month of gains. The Dow closed Monday lower, but held its 10 day moving average. Volume was lower on both the NYSE and NASDAQ as the broader market closed lower. A gradual corporate tax cut plan was rumored to be the reason stocks closed lower. However, after the recent gains it is no surprise we see stocks take a pause consolidating gains. Trying to find a reason for any movement is the job of the financial news media and not for you and I. We will focus on what matters and that is price. While we have a low volatility environment where gains are slow we can only trade what is in front of us. Our uptrend is still in place and will look for it to continue.

The Federal Reserve will kick off its 2-day meeting today concluding tomorrow where we will get their latest statement at 2pmEDT tomorrow. The market fully expects the central bank to raise rates at its December meeting. Odds of the hike are above 80% and after tomorrow’s statement the market will adjust once again. Economic data and earnings continue to be positive and would lead one to think a rate hike is just around the corner. We will get more information tomorrow and we certainly should see some fireworks after the release of the statement.

AAPL and FB are the last two large cap technology names to report earnings and do so this week. Both are trading as if response to earnings will be positive. We certainly do not know if this will be the case, but if AMZN, GOOGL, and MSFT are any indication we should see both stocks trade higher. Earnings season has been better than expected. Companies are getting good and under selling earnings and then beating them. Is this sustainable? It is anyone’s best guess. We’ll rely on our process of identifying solid patterns and focusing on our winners. Cutting our losses is paramount and a staple of our trading process. You need to fall in love with the process. Otherwise, you run a higher risk of ruin and we would hate to see you not trade.

Not the best starts to a week, but after this month’s gains it is no surprise we get a little consolidation. We would love for this uptrend to continue, but know we must focus on our process and remain discipline. Good luck with your trading this week!

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