For the fourth straight day the S&P 500 ended the day with gains. While it was nice to see gains, the last 30 minutes was not exactly what you want to see to close out the session. Volume on the stock exchanges were mixed as NYSE volume fell, but the NASDAQ saw volume higher. The Dow Jones Industrial average led all indexes higher. NASDAQ Composite lagged behind. We certainly would love for a period of consolidation, but it appears the market has other plans at the moment. At this point in time we are in a solid uptrend and we will continue to operate as such. Stick with the plan.
The rise off the December 26th lows has been something else. It really isn’t a huge surprise given we are now conditioned to these v-shaped moves. Like it or not this is the market we have and to make gains we must go with it. Rowing against the current is not a smart idea. As long as we follow the trend with a sound risk management process in place we can take advantage of any market.
The NASDAQ and RUSELL 2000 still remain below their respective 200-day moving averages. It would be great see both regain this important moving average, but just as important would be setting a new higher high. While we confirmed a rally attempt to confirm an uptrend we need a set of higher highs and higher lows. We have yet to set either, but over the next few trading session we have the ability to do so. It would certainly be a great sign to confirm a new uptrend at some point. Keep an eye on key moving averages as well as this market setting a new higher high.
AAII Sentiment shifted back towards neutral with Bulls ending the week at 35% and Bears ending the week at 25%. Bears are still quite low and would suggest the market should be hitting some resistance. A period of consolidation along with an increased level of bearishness would certainly be a solid set up for this market to return back to all-time highs. We have a long way to go in order to recover all-time highs, but there are encouraging signs from this market. New long signals continue to pour in and it is a good sign for us and this market. All we need to do is obey our trade signals and follow our risk management process. Discipline is vital to our trading success.
We hope you have had a great week of trading and wish you luck closing out the week!
