Today was a nice day for the markets following yesterday’s solid performance. While many can find faults with the current market, but will finding fault make you money in the market? Not likely, and therefore we simply follow the market signals by pushing forward with our trading. It would have been nice to see the market follow up Tuesday’s gains with more gains today, but today’s light volume affair helped digest the recent gains. We’ll be getting a slew of economic data and they typically get the market moving. In addition to further market gains we’ll need to see our typical market leading stocks to push higher. Not a bad day for the market from our point of view, but it is time we start operating in high flying stocks.
While we typically seek out stocks returning 100% or more in a shorter time frame we simply haven’t seen these types of moves. Sure, you get the occasional penny stock soaring something ridiculous. However, we are referring to stocks that move 100% or more over a 3-6 month time frame. TSLA was a great example of the type of stock we want to get aboard. There are a few stocks we currently see with potential to be big movers and if they trigger a long signal we’ll hop aboard. Until such time we’ll continue to search for stocks with the potential to move big.
There are certainly some red flags in this market and we’ll make note of them here. It doesn’t mean we can’t run higher throughout the entire summer. And by no means does it mean we want to miss out on gains, but we certainly want to know the risks. One such risk is the lack of fear in the market as measured by the VIX. There are quite a few people ringing the bell on the VIX and trying to call a market top. We aren’t, it simply means market participants aren’t really fearful of any large market movements in the foreseeable future. Could be months before any meaningful action occurs, but it also means any potential gains are likely to be small. If you manage your risk through position sizing and exits you will always over the long haul come out on top.
One thing many haven’t noticed, but the IBD market outlook turned to Confirmed Uptrend. As of late the IBD market calls have been sell signals. I might add, in 2012 when they called an uptrend after Thanksgiving was spot on and the market raced higher. It was interesting after Day 29 (NASDAQ) there was a follow-through day. Interesting market we have, but rules are rules and if a confirmed uptrend is what we have we play it.
We’ll see you back here tomorrow.
