Today’s market was void of any economic releases, but this morning’s market saw AAPL trade in double digits after a 7-for-1 stock split. Small caps stocks were the leaders of today’s market with the Russell 2000 nearly up one percent for the day. NASDAQ finished behind the Russell 2000, but well behind the small cap index advance. The Dow and S&P 500 finished just barely in the green. Volume was mixed on the day. AAPL split skewed the NASDAQ figure and was the sole reason volume was higher. Not a bad way to start of the week especially with the Russell 2000 playing catch-up. We’ll continue to push forward with this uptrend.
It is no surprise many are looking to play a reversion to the mean with the S&P 500 where it is right now. Its RSI is above 70 and typically offers a decent risk/reward trade. The downside here is quick reversion trades do occur only to see price vault back above the previous highs. Another downside is this market could rocket higher without regard for its “high” RSI. There are always risks, but why fight an uptrend when you don’t have to? A quick mean reversion trade would work, but we caution you to have a solid plan of action that you can adhere to. In the meantime, we’ll just continue to ride this trend.
Perhaps a surprise move was the move higher by the VIX after closing Friday at fresh new lows. One could argue Friday’s move was capitulation, but it is very hard to pin point precise capitulation without volume. Today’s close saw the VIX get dumped helping the market push higher, but still was able to close in the green. Complacency still remains high, but just like oscillators it can stay like this for very long time.
Turnaround Tuesday is tomorrow. It wouldn’t surprise us to see this market open lower only to turn on a dime and close green. We are in an uptrend and until this changes will charge forward.
