We did say volatility would be a factor post FOMC announcement and the stock market most certainly did not disappoint in that department. Stocks went on a wild ride after the FOMC announced a 25bps cut and hinted it would likely be the only one. The stock market did not take too kindly to the news sending stocks lower. After the dust settled the stock market suffered a hefty day of distribution. Not the type of action you want to see from the market heading into the what is historically the worse months in the stock market. This is precisely why we have our risk management strategy deployed and it will be key moving forward. Will we see a large correction? It is anyone’s best guess, but it does appear likely we will contend with further downside. Stay the course and be ready for anything from this market.
Just as the market makes a turn the crowd gets bullish. AAII Bulls ended the most recent week at 38.4%. A 6.7% increase week over week while Bears ended at 24.1% down 8%. Those who were neutral ended the week at 37.5% up 1.3%. By no stretch is this at extreme levels. AAII simply has too many who are neutral to push either Bull or Bear to an extreme level. Not a surprise given this market has and continues to be a difficult one for the average investor to manage. It is why we exist at Big Wave Trading. We give you signals to act upon and while you don’t have to take every signal you may choose to take the best ones. In this market environment you will need all the help you can get.
Wednesday’s stock market session does not guarantee we are headed for a correction. Most will believe doom and gloom is about to strike. This may not be the case while the odds of a correction have increased there are no guarantees in the stock market. We may very well find ourselves back at Wednesday high of the day for all we know. The best course of action is knowing your exits and ensure your position sizes are on point. Do not think you know where the market is headed next. React to price accordingly with a plan. It seems so simplistic, but so very powerful.
We hope you have a great day of trading. It is the start of a new month and new possibilities. Do not waste your opportunities and make sure you are enjoying the back side of summer.
