From the Trading Desk

WMT and CSCO Lift Stocks after Earnings

After the market had gone quiet for a few days we get a day like Thursday. Sentiment across the world had quickly become bearish as many are looking to pick the top of the market. We on the other hand simply follow the trend and react to the market rather than guessing what the market will do next. WMT and CSCO jumped big after reporting earnings and were a big reason we saw the entire market move higher. Retail perhaps isn’t dead outside AMZN? Retail now will have to endure the holiday sales onslaught and whether it will be good enough. What will matter is how the market reacts every session and our discipline. This market is resilient and when it changes character price will give us the indication. Until such time this uptrend has legs and we will continue to follow the prevailing trends.

It is amazing to see how quickly sentiment changes. There are so many people looking to pick a market turn this uptrend continues to prove them wrong. At what point do people give up and stop flipping bearish so quickly? AAII Bulls were at 45%, but now sit at 29%. Bears up to 35% from the low 20s. NAAIM Exposure Index is in the mid-50s, but what is a little peculiar is the fact that there were no bearish bets and the standard deviation was so low. Active managers are heavily clustered around the mean and have cash on hand to deploy. At least most do not have to cover and then go long. We haven’t waivered and continue to make gains while others struggle to figure this market out.

Where do we go from here is anyone’s best guess! Thanksgiving holiday week is next week, and this week tends to be positive. It would not surprise us to see Thursdays gains continue into next week. We have a little over two weeks till our next Fed rate hike. Keep an eye on XLF and XLU. Even XLRE will be interesting to watch as these two are the most sensitive to interest rate movements. Trends are in place and it is a matter of managing risk and executing trade signals.

We hope you have a great weekend. As we always say it is important for everyone to enjoy their time away from the market. Come back rested and focused. Be ready to take advantage of what this market is going to present to us. No matter what your opinion of the market is. Ignore it and stick with the trend.

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