Monday’s session served a lesson to bears who were over anxious from last week’s pull back. The Jewish holiday Yom Kippur held back volume as many on Wall Street observed the religous holiday. It didn’t hold back price gains as traders pushed stocks higher throughout the session. Even a negative reading from the Dallas Federal Reserve Manufacturing didn’t stop stocks from moving higher. Leading stocks took the lead after a two day hiatus as a positive sign for this market and even a few leaders moving quite nicely.
We stated here plenty of times that opinions in the market simply do not matter. We could roll over with more distribution and leaders failing, but we have yet to see what signals a market turn. Again, the market will bounce and pullback as we move higher and this shouldn’t surprise us. Going back to early September we saw the market rebound from a pullback on light volume. Will we rally here, I can not say, but I can not say we are going lower. It is wise to take it stock by stock and if this market begins to flash more distribution than I would look to scale out of positions. Not too mention we would need our leading stocks begin to roll over.
The low volume may be concerning to many and I am seeing a few out there who are critizing the rally due to the low volume. It would have been nice to see the rally come with volume, but it isn’t the end of the world. Even early this month as I mentioned earlier started on low volume. It can build upon itself if you have the proper ingredients for it to move higher. If you haven’t figured out by now it is quality growth stocks we need to move higher and they are leading.
The important thing here is not to get too cute with positions. Pick your spots and execute rather than getting too cute with anything. Too often traders get cute with a position and either cut too much or cut too little. Staying disciplined and executing a sound game plan is the course of action a smart trader would take.
Same ole story from the New High and New Low area. It is simply not relevant the amount of new lows at the moment. Eight new lows were seen on the NASDAQ and NYSE today a far cry from last year figures. I still hear squawking from the peanut gallery regarding the number of new highs and not having enough. Well, it appears the crowd has been wrong since July when the market resumed its uptrend. Making “cases” for the market to move up or down is simply an unwise move.
Always keep to your stop losses as it acts as an insurance policy on your trading capital. Stay focused and positive!
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