From the Trading Desk

Stocks Rally off Lows; Senate Releases Tax Plan

We finally got a bit of volatility, but once again this market showed its resiliency and pushed off the lows to finish the day strong. Where we go next is anyone’s best guess. However, Thursday’s action shows we still have a strong market and we must respect its power. Volume was higher as you might expect given the day’s action. Another solid signal is this market continues to throw out new long signals. As amazing it might be its just signals to us and we will operate like machines. Emotions only ruin your trading. All systems are a go.

Sentiment has moved more towards the bull camp. AAII Bears dropped to 23% while Bulls moved higher to 45%. We still do not have extremes in either direction, but bears are certainly very close. NAAIM Exposure index dropped to 56% a new low we haven’t seen in months. An interesting development with stocks near all-time highs and active managers are positioned for a market decline. We remain very much long this market. Evidence has not piled up to where it would trigger us to get defensive. If we were to see yesterday’s low breached with heavy volume and close below it would be something give us pause. Until there is more evidence we are not going to let off the gas here with this market. No need to prematurely get off this wave.

We hope everyone has a great weekend. Go out and make sure you enjoy time away from the market. We love this game, but understand it is important to have fun outside the market. Good luck today and we will see you next week. Cut those losses short and continue to ride the winners like NVDA!

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