A light volume day on the exchanges on Tuesday as traders came back from a long holiday weekend in the United States. Small Cap stocks led market gains, but gains were small and given how low volume ended the session it was quite a boring. We will take boring, but at this point we have yet to see any resemblance of consolidation to our liking. Moreover, the more vertical we get the higher likelihood we see a sharp drop along the way. Despite the vertical nature of this rally it is a good sign the market indexes are above their respective 200-day moving averages with the exception of the Russell 2000. We will continue to remain vigilant with our stops and position sizes even with more long signals for Wednesday’s market. Stay focused and disciplined with your approach.
At the moment, the only major index remaining below its December high is the S&P 500. 2800 will be a key level for this index as we continue to move forward. It would be nice to get a period of consolidation above its 200-day moving average. A timeout here across the board would do a world of good. It would allow more stocks to setup in bases producing new signals. We know we cannot have it all, but at this point we would welcome any type of consolidation. There is a chance we may never see this market consolidate the way we would like and it is precisely why we simply follow price. Strict risk management allows us to focus on what truly matters and not what “might” happen. Too many traders fail because they fall into the trap of thinking they know where the market will go. Don’t fall into this dangerous trap.
Some big name technology companies like FB, AMZN, and MSFT look very interesting here. FB was beat down late in 2018 as the company itself was running into issues. Traders slammed the stock, but after reporting earnings could be potentially setting up for higher prices. AMZN and MSFT are in the same boat. Even AAPL is trying to consolidate for another long run. These 4 stocks make up a good portion of the NASDAQ and are worth watching.
We have a bunch of new signals for this morning. Again, a decent sign this market is coughing up new long signals. It does not guarantee we continue to march higher.
Remember, we are getting into overbought territory and have formed a v-shaped rally off the December 2018 lows. While we are not complaining about the gains we have experienced we just want to be aware and maintain an open mind regarding this market.
We hope you had a great long holiday weekend and wish you the best with your trading this week.
