From the Trading Desk

The Stock Market is off to a Great Start; Earnings Season Underway

What a great start to 2018. No matter what you think of this market is pretty impressive we have begun the year this way. Given all the historical research we should see this market higher than where it ended in 2017. A correction of some kind may sting this market, but in all likelihood we should continue to see support rush into this market. We have enjoyed this ride tremendously as we have simply ridden the trend higher. There is no magic or secret sauce. Following price action along with a sound risk management process has helped us take advantage of this market. We certainly understand underlying “macro” risks, but our primary concern is how our stocks are acting. Everything else is simply noise to us. We hope you are enjoying the gains right along with us.

There is no question sentiment has touched extreme levels. II survey has shown its members haven’t been this bullish since 1987. AAII Bulls continue to remain high and ended this week in the 50s. Bears aren’t at lows for the AAII survey but are near all-time lows in the II survey. Sentiment is never perfect and should not be used as a timing tool. We have a lot of bulls out there and if we are to move lower the exits will get crowded and crowded quickly. You must be vigilant with your position sizes as well as exits. We have stops in place to help protect our capital. What are you doing to protect your capital?

Today’s market will contend with options expiry. Volume will be skewed all day long and will highlight how we will be solely focused on price action. Stay focused on what matters and leave others to fighting the noise. There is no need to be “smart” as you simply just need to be with the trend.

Where we go from here is anyone’s best guess. We do not have a crystal ball and cannot predict the future. There is a good chance we get some sort of correction, but odds a recovery happens and new all-time highs are very good. That is not to say we are going to try and grab falling knives, but aware long signals should not be ignored. We do not want to miss out on gains.

We hope you have a great weekend ahead. What a tremendous start to the year and we are looking forward to a great year.

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