In a good showing the stock market was able to rebound from yesterday’s weak session. Higher volume certainly was on the buy side and is favorable for this current uptrend. Volume on the NYSE was much higher on the day as industrials continue to push higher. However, the big move on the day was the Russell 2000 as small caps get back on track. One of the best situation for this market is to have small cap stocks leading the charge higher. Risk perhaps is back on and we will continue to operate under this confirmed market rally. We have an exit strategy if the market turns against us and you should have one too.

At this point we are quite overbought in the near term, but that does not mean we are setting up for failure. There is enough life in this market to keep this thing going while remaining overbought. We continue to hear the QE4 drum beating louder. It is quite evident given the economic data the Federal Reserve will not be raising interest rates ANY time soon. A low rate environment will allow companies to finance stock buybacks. Buybacks continue to add a bit of wind to the market’s sails. Are we setting up for a big fourth quarter rally?

It would be nice to end the year with a market rally and close in positive territory. Small Cap stocks have been the weakest bunch since the beginning of the year. Not to mention there is more money to be made on the upside rather than the downside. Stay tuned.