There is very little doubt we are not in a melt-up phase of this historic market run. Buyers continue the relentless quest acquiring shares at higher prices. Regardless of what you might think of valuations buyers are still bidding stocks higher. Whether or not we go parabolic is anyone’s best guess. Futures are higher across the board prior to Wednesday’s session. A week from now the Fed will release its statement after its first two day meeting of the year. Earnings will continue to pour in and next week will be a busy week. NFLX had a tough time yesterday holding its open, but was able to finish nearly 10% higher on the session on the back of its most recent earnings report release. Uptrend continues.
What more is there to say about this uptrend other than what has been said. Lack of volatility, high valuations, and extreme sentiment are known. Despite these factors we see the market pushing higher. At some point we will likely see some correction, but given historical precedence we should find ourselves higher a year from now. Bond yields are moving higher as bond prices continue to fall. Higher rates are putting pressure on bond prices. How this impacts the stock market is anyone’s best guess. Yield curve inversion is a good predictor of what is to come from the economy. However, we have seen normal signals turn sour in this market environment. Remember, in 2009 we saw distribution pile high only to see the market shake it off and push higher. Stick with price and a sound risk management process and you will do well.
FANG stocks for the most part are acting well. AAPL is the only one really struggling here. I would expect to see them to continue to run higher into earnings. Why? They are in an uptrend and showing no signs of letting up. Why would this change? Stick with price.
We hope you have a great day of trading!
