What a way to kick off the week with the Dow opening down more than 400 points. Fears over a trade deal falling through on a Trump tweet sent the algos scrambling selling futures Sunday night. What a truly amazing time to be alive with a simple tweet causing algos to go haywire. We did see the entire market fight back with small caps leading the way. A good sign as we have seen small caps lag the broader market in a significant way. Monday’s trading session certainly does add a bit of risk on the table and we should adjust position sizes accordingly. We will be diligent with our exits and not allow losses grow or lose out on tremendous gains. Risk management will always be our number one priority.
Bond market still is pricing in a weaker economy as rates continue inch lower. Oil prices while off their highs are still above $60 a barrel. Friday’s job report showed solid growth in jobs, but are we seeing the peak of employment? Hard to imagine we will see much more improvement in the jobs number given we are at historical extremes. It is great so many have jobs and while we would love for it to continue we do know good things don’t always last as long as we would like. Whatever the economy will want to do we will focus in on the price action of the market. We cannot and will not concern ourselves with things that simply do not impact our trading success. We do not wish to win at the cocktail party game. Rather, we’d like to extract as much gains as we from the stock market. This is our focus.
Monday’s action certainly adds a bit of volatility and uncertainty as we proceed. Our best course of action is to remain vigilant with our risk management process. We do sound like broken records, but it is vital to our success.
Best of luck to your trading this week!
