There is simply no quit in this market whatsoever. Sure, the Dow closed lower by almost 13 points. However, the overall market continued to make gains. The ability for the major indexes to hold their respective 10-day moving averages is something extraordinary. Volume on the NASDAQ exchange was a bit higher while NYSE volume slipped a bit. Overall, we are in a healthy market uptrend with very little indication we are going to roll over any time soon. The only downside here is there are many bulls and is nearing extreme readings. Sentiment is not a perfect indicator, but we are certainly seeing higher than normal readings. We have our stops in place and are ready for anything this market is going to give us.
The lack of volatility is something else too. It is quite difficult to write commentary in these low volatility periods. It has been one of the easiest markets to hold longs in. FANGS are acting really well and there is a whole host of fantastic chart patterns out there in the stock market. Earnings season is fast approaching and estimates have held pretty steady. Tax cuts and a huge holiday shopping season has many investors looking for solid earnings. The S&P 500 and NASDAQ 100 do trade at rich multiples to their trailing twelve month earnings, but with this corporate tax cut passing it may explain why so many were willing to pay up on earnings. In the end we do not care what others do and interested in only our process and what price does.
While we cannot see the future it would not surprise us if this market continues this win streak. New highs are not bearish no matter what people think. We are in unchartered territory and what matters most is controlling our risk. Do so and you will win the day. Have a great week of trading!
