A solid day for small cap stocks as IWM jumped 1.65% on the day with higher turnover. The same could not be said for the Dow as it closed nearly 80 points. Thanks to CAT and BA the two largest detractors from the day. BA issues are well known with the grounding of 737 Max. CAT is in a downtrend but hasn’t been a focal point as it is being overshadowed by BA issues. IWM had an impressive day and while it is just one day a good sign nonetheless. We need to see this continue as we move forward. The NASDAQ had a great day too. Volume was up across the board on the NYSE and NASDAQ. A very good sign for this market as it shows institutions were out scooping up shares. Let’s see if this trend can continue.
An interesting development in the AAII Investor Sentiment Survey this week. The number of Bulls dropped to 31.74%. Last week the index was at 35.93. A bit hard to believe Bulls would be so weak. Bears jumped from 28.64 to 32.02%. Interesting to see how the public continues to shy away from getting too bullish. Are the wounds from 2008 still fresh? Perhaps, but all we can do is rely on the most important indicator: PRICE. The last thing we want to do is begin to guess where this market is going to go next. Our hard-earned capital is at stake and we do not want to pass up an opportunity simply because we think the market will do this or that.
Where we go from here is really anyone’s guess. What we know now is we have a market in an uptrend. While IWM has lagged a bit, yesterday was a great start. We need to see more. Do not get caught up in the noise generated by Wall Street. The ECB cut rates and signaled more monetary support. Will the FOMC do the same come Wednesday? Who cares. All that matters to us is how the market reacts and we react along with it.
We hope you have a great day on Thursday.
