We continue to see buyers jump into the market as people cheer on the GOP tax plan. The Dow hit its 70th all-time high on Monday besting 1995’s year of 69 new all-time highs. This is not a bearish indicator and while we could experience a pause ultimately all these all-time highs are a bullish indicator. Volume was lower due to Friday’s inflated figure from options expiry, but was above average. All systems are a go and we continue to see new buy signals. At some point we will experience some sort of selling, but we will let the market dictate our actions and not our emotions. It wouldn’t take much for people to get bearish in a hurry. Shorts are dying to top tick this market. Stick to the trend.
It is a likely scenario to see sellers hit the market once the tax plan is voted in. We have had a lot of buying the rumor and we will likely see sell the news event. If this market is anything like 1995 selling will be contained and new all-time highs will commence once again. The best course of action is to manage your exits and position sizing.
We will say, writing commentary is terrible difficult when there is little volatility and we only go higher. Sure cryptos are on fire, but as far as stocks go when was the last time we had the VIX above 20? Even then, it didn’t last very long. However, we can only trade what is front of us. No need to wish for a different market as it will cloud our judgement.
Stick to the plan and have a great week of trading!
