For the first time in two weeks the NASDAQ saw its constituents collectively close to the downside. Overall, the entire market slid as volume as lower across on each index. NASDAQ exchange volume was higher on the session, but only by a few basis points. Thursday’s action is just the type of consolidation we want to see: lower volume declines. It would be great to see this market consolidate over the next few weeks. At the moment, we will simply continue to act according to plan and keep an open mind with this market. There is no reason to deviate from our plan and we will continue to reap the benefits.
If you are frustrated with this market you will have to look at yourself in the mirror. The market simply does not care about your feelings or how you are trading. Take a step back and make sure you are removing all bias from your process. Do you have a risk management system in place? Do you know what your open risk is at all times? Knowing your exits is paramount to your success as a trader. It is not where you get it is where you get out. Of course, we do not chase a stock well beyond a reasonable buy point. However, if you don’t know where to get out properly you are in a world of hurt as stocks can move against you quickly and will do a lot of harm. Take a step back and reevaluate your trading strategy and Big Wave Trading is here to help!
Market sentiment is certainly bullish and it really isn’t hard to see why. This enormous v-shaped rally will help push sentiment towards the bull camp and we see that with 39% of AAII respondents say the market will be higher 6 months from now. Bears dropped to 25% on the week. The good news for those who are long this market is we do not see an extreme reading from the Bull camp. There is plenty of room before we see an extreme figure. NAAIM Exposure index dropped week over week as active managers trimmed their long exposure. Again, we are not seeing any extreme sentiment readings from market participants. Perhaps if this v-shaped rally continues we will.
We certainly hope you have had a very profitable week of trading. As we have said in the past you need to fall in love with the grind. It is a daily grind and to be success you need to be great at the little things. Discipline equals freedom. Have a great weekend!
