After Tuesday’s solid session traders followed up the day with a quieter day with volume coming in lower across the board. Not a bad way to follow up big gains, but it was also nice to see Small Cap stocks inch out gains while the NASDAQ and S&P 500 took a breather. After the bell FB and MSFT reporting earnings and buyers are set to push both stocks up around 9% Thursday morning. These two will certainly help the NASDAQ higher at the open. Where the day goes from there is anyone’s best guess. We have positioned ourselves accordingly and have taken advantage of the gains the market has presented us here. We would love to see the Russell 2000 take the reins from the NASDAQ 100 and push itself back to all-time highs. Time will tell. Our focus right now is what we in terms of open risk and we will remain disciplined. We’ll follow this market wherever it wants to go.
Another interesting week for sentiment as we see those who are neutral continues to build. Most likely those who are responding in the AAII Sentiment Survey are likely in shell shock and will remain on the sideline. This may mean many different things, but it is unprecedented to see this many people who are throwing their hands up. It is doubtful they have seen the light and simply want to follow the market’s direction. We are simply following the trend while most want to outsmart everyone at their cocktail parties. Even the II survey saw Bulls drop. Not typical for the II Bulls. Typically they do not waiver. Bears across both II and AII survey moved lower and are nearing an extreme level. Interesting developments and while these respondent focus on the wrong area we will continue to focus on price.
Earnings season seems to be going better than expected given the reaction to reports. More Big Cap technology stocks are reporting through the end of the month and will certainly provide a few fireworks for us. As long as you are controlling your risk through position sizing and exits there is no reason you cannot take advantage of this rally. Especially if it continues! Stick with Big Wave Trading.
We hope you close out the week strong with your trading. Please go out and enjoy the weekend.
