Just when this market looks week it reversed today on strong volume. Economic data was again less than desirable with the exception of jobless claims. Inflation is non-existent and Empire Manufacturing was once again weak and weaker than expected. Bank earnings were mixed with GS disappointing while C beat expectations. Gold continues to act well as the dollar continues to weaken as the Fed continues to hold rates low. While it appears we are overbought this market does not want to quit just yet. Continue to work signals and maintain proper risk management. If this market wants to go higher we will simply follow along. Stay the course.
Sentiment has not really swung back into the bull camp. NAAIM exposure index has not rebounded as fast as you might think after this recent rally. Managers’ sill have less than 50% long exposure to equities. This is quite low. AAII bulls fell to 34% while bears ended the week at 27%. Hard to guess where the majority is, but one can imagine they have the deer in the headlights look. This is where those who think and feel there way in the market will ultimately lose in the long run. Opinions are often wrong. However, a sound strategy with a solid risk management process will win in the long run.
AMZN and FB had nice days today. While volume wasn’t overly impressive it is nice to see these leaders continue to push higher. As energy stabilizes we are likely to see energy stocks setup and breakout. It does not mean oil is returning to $70 any time soon. Gold stocks are another group to keep an eye on. If you are able to remain objective and an open mind there will be plenty of opportunities to cash in on this market.
So far we have been able to capitalize on our limited opportunities. Although limited we can still make gains. We do not want to miss out on an opportunity to push our accounts to new highs.
Keep the laser focus on executing your strategy. Have a great weekend.
