We hope you had a great weekend. Futures are flat heading into the final full week for the month of September. September has been an okay month for stocks by bucking the historical norm for the month. Shrugging off last week’s Saudi oil field attack crude has come well off the highs of last week. Stocks are flat and now news outlets are focused back on US and Chinese trade relations. US yield curve is still out of whack and while the 2-year remains below the 10-year yield the lower end of the curve still is suggesting some trouble ahead. IWM still can’t seem to crack $160 while QQQ and SPY are still knocking on the door of all-time highs. DIA is in the same boat. This market is in a holding pattern here and why you should know where to exit. Do not expect this stock market to play nicely in the sandbox.
Over the next few weeks we are going to see a lot of news regarding trade relations. Whether it be someone leaving a meeting early/late something will be said. The market will react one way or another. This noise will do plenty to most traders’ psyche. For us, we will stay calm, cool, and collected. Position sizing and our stops will keep us from having to worry about this market. Most tend to worry too much because they have not planned properly. We are still in a weak in terms of seasonality and would not characterize this market as a strong one. All we can do is position ourselves as price sees fit and protect our backside.
A quick look at the old FAANG stocks and we see a mixed group. AMZN and NFLX are struggling with NFLX appearing extremely vulnerable to further downside. AMZN too, as both stocks had difficult days on Friday for those who are long the stock. FB is in no man’s land. AAPL and GOOGL are both holding up relative to the group. MSFT who hasn’t made the club has been a slow and steady stock trending higher. We prefer to focus on smaller cap stocks who are leading this market higher versus laggards. While large cap technology stocks performed well, they have been struggling a bit. Time to continue to focus on strength and manage our risk properly.
We cannot stress enough the importance of ignoring the noise spewing from Wall Street. They need to sell ad space to anyone who is willing to pay attention. Ignore it. Focus on what truly matters and your trading will thank you over the long run. We wish you the best of luck this week!
