While stocks were able to finish off their lows of the session the price decline coupled with volume notched a day of distribution. The good news for the market was we were able to see the major market averages hold their respective 10-day moving average. Another positive was the Dow Jones Industrials average recaptured and has held its 200-day moving average this week. Now, the market needs over the next few weeks to see consolidation and the remainder of the indexes recapture their respective 200-day moving averages. Thursday’s market action wasn’t all that bad, but should remind traders the market can turn at any moment. You must have a plan of attack.
At the moment, the NASDAQ Composite and S&P 500 are still below their 200-day moving average. The Russell 2000 has yet to run up to its 200-day moving average. It doesn’t mean we are automatically going to see this index turn lower and return to its lows. All of the indexes are above their 50-day moving average and that is a good thing. All we can do here in the present is manage our stocks as price unfolds in front of us. Plenty of stocks showing some promise from an end-of-the-day stand point. The key will be how well you execute a plan of attack. What is your position size look like? How much risk are you willing to take on? Knowing where your exits are and executing is vital. Without a plan of attack you are opening yourself up to significant pain.
AAII Bulls ended this week up to 39.87% and it should not be a surprise. Bears dropped to 22.78% a fairly low number for the AAII Survey. NAAIM survey shows active managers are exposed to the long side, but nowhere near extreme levels. If we do get an area of consolidation it would be interesting to see how the crowd shifts its sentiment. We cannot say enough how great if the market consolidated its gains for a few weeks. It would really set us up nice heading into the 2nd quarter. We can dream and we can only trade what is in front of us. Most want to trade what they think should happen and they could not be more wrong.
We hope you have had a great week of trading. If you do not fall in love with the grind it will be a difficult profession achieving great success. Fall in love with the grind and eventually you will find success! Enjoy your weekend.
