Another day of gains for the stock market as buyers rush back into stocks. Volume was higher on the NYSE as well as the NASDAQ. The Russell 2000 lagged behind for the session as traders continue to flock towards larger cap names. We would very much like to see traders and investors a like take on a bit more risk with small cap stocks. Regardless, we continue to see strength from plenty of stocks. While most are focused on headlines our main priority will always be our open risk and price. Too often traders get fooled by their emotions rather than follow their process. We are not about to waiver. How much upside left in the current rally is unknown at this time and our only course of action is to remain disciplined in our approach.
What is interesting was the number of Bulls in the AAII survey remained below 30% despite this current rally off the lows. Of course we could see this number change next week, but Bulls didn’t immediately jump back into this market. Throughout the blip we stayed relatively long the market and it paid off as we have rallied nicely. NAAIM Exposure Index is back above 70%, but the index still shows active managers are not overly eager to get much longer at this point in time. We can understand the uncertainty, but we cannot understand ignoring obvious signals. Manage risk properly and you do not need to worry about losses impacting your trading greatly. Fear will ruin your ability to capture big gains. Stay disciplined in your approach and ride the wave higher.
As we head into the weekend it would be a prudent move to make sure you know your open risk. Where are your exits? Positions sizing is on point? These two factors are immensely important to the success of your trading account. We find many do not understand the importance leading to suboptimal results. Avoid despair and ensure you have a proper risk management strategy in place.
We hope your trading has been successful this week. It is important to get out and enjoy life a bit as the market tends to be a grind. We love it, but it is nice to get out and enjoy life. Happy Summer Solstice. Enjoy the weekend and we will see you Monday.
