We continue to see stocks rally off the December lows. The NASDAQ led all major market averages with the Russell 2000 a close second. Volume was normal a Monday, lower than Friday. It would be great to see some resemblance of a consolidation period. Gains are fantastic, but taking a moment to pause and digest would help us continue this market rally. Given the major indexes are nearing their respective 200-day moving averages it would not be a surprise resistance comes into play. February is the 3rd worse month of stocks historically and it is wise to make sure you have proper position sizes as well as your exist strategy in place. Otherwise you run the risk of ruining your gains if the market does turn south. Wherever this market wants to take us we’ll follow. Keep an open mind and cutting losses.
Earnings season is in full-swing and it does not appear to be a damaging one. Over the last summer we had quite the wild swings in individual names. It was quite remarkable the average-true-range of the market wasn’t even higher. Of course, once the selling set in at the beginning of October we saw volatility go through the roof. Since we have bottomed volatility measures have eased off their highs. Even the VIX is back below its 200-day moving average. Would selling spike VIX once again? The real question is do you have a plan if selling does occur? If you do not we strongly suggest you reevaluate your trading and get a plan. Big Wave Trading is here to help.
There are some decent stocks out there throwing out buy signals. We have quite a few new ones for today’s session. Of course our subscribers get access to these and are emailed every evening. If this market wasn’t healthy we wouldn’t be seeing signals. For now, it does appear we have a decent rally. The obvious resistance stands in our way and it remains to be seen if we have enough power to push through. We are a bit overbought coming off some serous selling and it would be nice to see the market consolidate before continuing its move higher. Whatever direction the market will head we will follow suit.
This market is a grind and you have to be in love with the process. Otherwise, you will get burned out and give up. Fall in love with the grind and you will be rewarded. Best of luck to your trading this week!
