A solid day of gains for small cap stocks as measured by IWM, but QQQ stumbles after GOOGL falls post earnings. Volume was mixed on the session with NASDAQ volume ending lower while NYSE inched higher. The NASDAQ escaped a day of distribution. DIA closed flat with a .01% gain on the session. All eyes will be on the Fed this afternoon with AAPL not too far behind after the close. Expectations are for another rate cut and the FOMC statement will be highly scrutinized. We will be focused on the price action of our stocks. Nothing at this point would surprise us. We are prepared for whatever the market ends up heading. If we were to fight tape the outcome would be catastrophic for our portfolio. Stick with the trend and control your risk.
Since the 2008-09 Great Recession the Fed has been heavily involved by providing trillions of liquidity and low rates. We are not here to debate Fed involvement as we would certainly have to at least start with what happened with Long Term Capital Management (LTCM). What we do know is the FOMC will likely stay involved with providing something to support the economy. This backdrop has providing this market a floor. Last December was the first time we really saw stocks vulnerable to a big decline. Sure, the flash crash and the fiscal cliff were points in time where it felt like the market could seriously decline. However, this past December had a bit more juice and certainly had plenty of traders worried about an all-out crash. In the end, the FOMC is an important cog in the wheel of the market. Today will be at least an interesting day to watch the market action unfold. Have a plan and do not under any circumstance deviate from it.
This market is unrelenting and not one to make life easy on a trader. For those who think they will get rich quick will likely exit the market quickly. Your opinion on the market doesn’t matter. We have certainly seen people leave the market because of their opinion. Stay in the game for the long-term. Control your risk and focus on winners. A simple formula. A time-tested formula. This is not new, and we did not make this up, but it is a powerful philosophy. Stay in the game and with Big Wave Trading.
Good luck to your trading!
