All signs were pointing to a more sinister day given how sellers hit the market hard from the open. It was not until AAPL found buyers did the market really begun to turn and stabilize. We have seen, more than a few times the NASDAQ find support at its 7000 level and Monday’s session was no different. Volume was lower across the board, but typical for a Monday. Perhaps continuing to be an issue is the continuance of Russell 2000 inability to find support. The index continues to lag and has done so for quite some time. We would certainly welcome the index to lead once again. This market has much to prove on the long side of things. There is no need to rush into blindly buying whatever might look good. Be patient and always remember to maintain discipline when trading. Risk management continues to be and always will be paramount to your success.
For the sake of conversation, the gut tells us we are far from out of the woods. Sure, the S&P 500 undercut its October low effectively wiped out the confirmed market rally. In the same day however, the index set day one of a new attempt at a rally. Of course, this type of behavior is not ideal for a new market rally. Unfortunately, it is what we are dealing with and we do not have another choice in the matter. Trading the market in front of you rather than the one you want is the best course of action. Otherwise, you are simply asking for losses to hit your account.
Next week is the final FOMC meeting for 2019 and odds still favor a rate hike. Most see the Fed as all knowing, but unfortunately they are human and therefore flawed. They moved quickly to raise rates relative to how long they kept their Fed Funds rate at 0%. Given how banks have traded (XLF) traders are expecting higher rates to hurt the banks rather than help them. We do have a situation where the 2 and 3 year Treasury note yields trading higher than the 5 year note. An inversion in the yield curve, many will see as the demise of this economy or at least current expansion. Remember, no other time in history has an economic expansion has last this long without a recession. We are way overdue.
We hope you have a fantastic week of trading. Trade with a plan.
