Insane or not this rally wants to keep plowing forward. Lead by the Dow Jones Industrial average this uptrend continues to defy the odds. Lagging on the session was the NASDAQ 100 and Composite indexes as the QQQs struggle with its 200 day moving average. Volume was higher on the session, but once again below the 50 day volume average. Crude oil finished at its highest level for 2016 with a 40 handle. Even with the rise in crude Materials and Industrials were the leading gainers. At some point we will get some consolidation. We continue to hunt down stocks breaking out of proper patterns. We do have a few solid names where buy stop orders will be placed. Stick with the trend and we will ride this wave until our process tells us to do so.
Tomorrow’s option expiry will certainly come into play with how the market will act tomorrow. Volume will explode with quadruple witching Friday. Options expiry always gives us some trouble as volume tends to skew the action. As long as price remains in the general trend there is not much else for us to do. Stick with it.
Sentiment took a hit this week with both the NAAIM Exposure Index and AAII Bulls took a dip. NAAIM Exposure index remains above 50% which means active managers are at least 50% exposed to equities. Many are under invested and more than likely missed and/or have been burned by this rally. AAII Bulls dropped on the week below 30%. All the bulls in the market last week were too shy to stick with their bullish stance. Speaks volumes and this market continues to sting as many participants as it can.
Stay with this trend. It could have topped today or next week we just don’t know. Corporate buybacks are expected to cease next week so we’ll see how the lack of buyers will impact this trend. No need to guess as we simply follow our process and execute. Have a great weekend.
