NASDAQ Sets A New High as Volume Rises

The morning part of the session sure looked like it was going to signal a big day of selling in the market.  Panic set in as the market opened as volatility jumped more than 10% across the board.  Sellers were doing their best to keep up the pressure on stocks, but it simply wasn’t in the cards.  Once again the market showed support continues to sweep in at the lows and power the market higher.  Today, it was even more apparent as the NASDAQ was down more than 30 points and was able to climb to close plus 14 points.  Opinions do not matter, this market has yet to change its character and until it does we will continue to ride this wave higher.

Again and again we see plenty of market pundits call themselves bulls looking for a correction.  They are trying to pick a turn in the market have been failing since February.  I am not implying we are somehow brilliant by not pick a top, but simply we wait for the market to confirm a move lower.  It begins with leaders, if we see weakening leadership with distribution in leading indexes piling up then more than likely the market is putting in a top.  Without that necessary formula we simply will continue to stay long the market and pick our spots to take profits.

Many pundits are calling a low VIX a troubling sign for the market.  However, the VIX continues to get rejected at its 50dma and is acting like it is going to continue to set new lows.  Taking a look at how the index behaved during the 2003 market rally you can see a lower VIX can lead to higher prices.  Rather than keeping it simple, looking at the market leaders and stock index movements pundits lean on secondary indicators to predict a market move.  Bruce Lee once said “Simplicity is the key to Brilliance” and we could not agree more when it comes to being a market operator.

Big Wave Trading certainly has been able to take advantage of this market and we have been enjoying the run.  Regardless if we want a correction or blow off top we will be taking our cues from the market.  Stick with the market leaders and they will be your clue.  Do not pay attention to what the futures are doing before or after the market.  I posted in our forums this morning this:

For those seeing the big drop the futs are indicating remember this…

NFLX market leader…is up 4% pre-market
QCOM market laggard…down 7%

Leaders leaders leaders

Enjoy the action on Friday and make it a GREAT weekend!