An interesting day on the street Monday as stocks enjoy a bit of a roller coaster ride intraday. Volume was lower across the board from Friday’s option expiry level. Not a surprise in the slightest. Earnings continue to be a focus of the market, but with the ECB and FOMC rate decisions looming it is unlikely we’ll see much action in either direction. We did see a headline where a presidential candidate was warning of imminent doom. Seems like despite the fact this market continues to hit all-time highs there are always detractors. Perhaps the candidate will be right. However, we are not going to put our hard-earned capital on a hunch from someone trying to get elected. We’ll continue our focus on price action of our stocks and the market. Leave it to others to be distracted by the noise.
Sure, we have our stops in place and hedging in place. However, this does not mean we automatically think this market is going to tank. Limiting our downside risk is what we are after in order to maximize our profit potential. We cannot make maximize our profit potential if we are not in leading stocks. Therefore, while we have positions on, we must have an exit strategy in the event the position does not work in our favor. Trust us, many stocks will simply not work out. We take small losses on the names that do not work out and ride our winners we’ll end up with solid gains in our portfolio. This is not new, and we are not special other than being able to stay disciplined. The undisciplined trader will end up with poor results by not controlling risk and missing upside. Do not miss your chance on making solid gains!
While sentiment readings come out later this week, we have seen a slight uptick in Bulls in the AAII Survey. II Survey we see almost a record number of Bulls and record lows for Bears. The market is around all-time highs, so it is not a surprise sentiment is slightly bullish. What is strange is the record amount of flows pouring into Bond funds. The S&P 500 is up roughly 19% on the year, but on an annualized basis Bond funds are seeing record flows of $455 Billion. Demographics certainly help with an aging population, but does it explain a record? An interesting development, but while we can say this is bullish for stocks it is price, we must be concerned with not an interesting anecdote.
We are going to stay the course. The ECB is this Thursday while the FOMC is a week from tomorrow. Big earnings from Big Cap Tech hit Wednesday and Thursday after the bell adding a bit of
sauce to the stock market this week. Stay the course and enjoy the last full week of trading in July.
