From the Trading Desk

Small Cap Stocks Begin Week Lower; Dow Inches Higher

First and foremost, we hope everyone had a fantastic Thanksgiving week and weekend. The Dow was able to squeak out gains during Monday’s session. Small cap stocks as measured by the Russell 2000 index were down the most at 39bps. VIX dropped nearly 2% as low volatility continues. Volume was above Friday’s shortened trading session. There isn’t much from Monday’s session that was significant other than it was a decent day of price consolidation. We have plenty of stocks looking fantastic. Closing in on the final month of the year it has been a great year for stocks despite all the naysayers. Most will look for December to be the month of reckoning while we take this market day-by-day. No need to be distracted; we must focus on the task at and what truly matters.

Sure, we have the Senate version of the tax bill at some point and the Fed in the next two weeks to give us headlines. Valuations remain high and volatility remains low, but because of these conditions it doesn’t guarantee the stock market is about to crash any time soon. Even if we were to experience rapid selling we have our stops in place to protect our backside. However, we are not about to jump ship at the off chance something may trigger widespread selling. Up until this point, any selling has been contained within the very session we have gone down. Not since August have we sniffed at a potential multi-week decline. Although, at some point we will have a correction we are just not going to try and predict precisely when it will occur. No need to churn our portfolio at the off-chance we may pick the turn at the exact moment we turn. Leave this part to the amateurs. Stick to the task at hand.

It seems shoppers were out in full force on Black Friday. AMZN tried to hold onto 1200.00 mark, but just could not hang on. It did close in positive territory for the day as the company saw massive sales increase year-over-year. I mean, why deal with crowds when a few clicks viola two-days later your item shows up at your doorstep! Easy. TGT and WMT were underwhelming. XRT sits near multi-month highs. Will the holiday season be enough to punch through? XLU and XLRE are trading like we are not getting a rate hike in December. XLF has held onto its 50-day moving average. For the most part, we are holding up well. HYG and JNK stumbled a bit yesterday as these ETFs are trying to recover ground lost in the month of November. All-in-all we are still within our current uptrend and while not the best we are still cranking out gains.

We wish you the best this week and enjoy Tuesday’s market action.

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