Fed week kicked off with a positive day for stocks. Although it did not start out well as crude oil continued to sink bring stocks down with it. Buyers began to pile into crude oil sending the commodity from heavy losses to a 2% gain. Energy names led the reversal and soon the rest of the market would follow with one exception. Small cap stocks did not enjoy the same buying frenzy the remainder of the market. Larger cap names continue to be the flavor of the month and while we can come up with a few reasons why it simply does not matter. All we need to know is the concentration of capital continues to flow towards large cap stocks. A solid reversal today with volume keeps investors hopeful stocks can continue to move higher despite the Federal Reserve outcome on Wednesday.

Stocks like FB, AMZN, NFLX, and GOOGL all found decent support today. Volume was okay and given today was a Monday it is a win for volume. On the flip side certainly is biotech names continuing to disappoint and likely keeping small cap stocks held back. The lack of interest in small cap stocks is concerning as we certainly need small cap stocks participating to believe this market can run hard. We must remained focus on what is moving and not worrying about what is lagging. Sticking with winners and shedding laggards is a recipe for success.

While today was a good day we can certainly see this follow-through tomorrow. It would be nice to stay quiet until the fed on Wednesday, but this market does not like to cooperate with what we or anyone wants. Our process allows us to take advantage of any situation the market presents to us and win. We are not concerned with narrative and completely ignore the Wall Street noise. Stick with price action and ignore everything else.

Let’s see how this market progresses leading up to Wednesday’s release.