Bulls simply could not hold onto gains during Wednesday’s session despite pushing higher during the morning. Volume was up across the board as institutions were active in the market, but the type of close certainly left a sour taste in the collective mouths of traders. Small cap stocks did lead the market higher, if you may call it that by finishing higher by more than 1%. It is a shame the group continues to lack enough interest. It would be great to see the group moving higher and lead this market back to new highs. At this point in time it appears unlikely. This market continues to be choppy and is unlikely to change its character any time soon. We will continue to operate with caution with proper risk management to weather this market and allow for clearer skies to emerge.
Many will churn their accounts in this type of market. Two reasons why are: trading too large of a position and most of all NOT cutting their losses. Belief or hope their positions will move higher is what will destroy most and worse of all if you have too big of position along with NOT cutting your losses. We pride ourselves on staying discipline and trading a sound plan. There is no way Big Wave Trading would have existed for more than 10 years if we did not follow a sound risk management process. Benefit from our process and our experience to help you grow your account.
Sentiment certainly has shifted to the bear camp and quickly. AAII Bears jumped nearly 20points to 48.87%. Bulls dropped to 20.9% from 38% last week. This comes as no surprise as the general market lacks any sort of accumulation, nor indication it can move higher. The last time we saw this many bears in the AAII survey it was early 2017 and early 2016 before that. Will we see the market rally with all these bears in the AAII survey remains to be seen. Price action is what we’ll focus on and what we truly care about. There is no need for distractions from market pundits who claim to know where the market is headed. Trade what is in front of you and stick to the facts.
We hope you close out the week well and enjoy the weekend!
