The first full week of November kicks off this week after a solid day of gains on Friday. Futures are indicating a modest open to begin the week. Friday’s volume was a bit of a disappointment given the solid gains across the board. Once again, this market will simply not give us what we ultimately want from this market. Small cap stocks led the market higher Friday with gains of 1.72% followed by the NASDAQ 100 gaining 1.13%. While positive, small cap stocks have a long way to go before catching the other major indexes. This market is far from perfect, but it is the one we have in front of us. There is no need for us to force anything here with our trading. Our focus remains on the price action of this market and our risk management process.
We have come nicely off the selling at the end of September. Bears certainly were hoping for the market to collapse. IWM specifically has risen quite nicely and is now sitting back at the top of its resistance. Punching through resistance in big volume would certainly be a positive for the group. QQQ and SPY continue to notch new all-time highs and remain bullish. Many will try and pick a top here while we simply ride the wave higher. Will this market end badly? Perhaps, but the question of when we finally get a bear market remains unknown. There is no need of us guessing when as we’ll miss gains to the upside. Missing out on huge gains is a huge mistake and one very tough to recover. A sound risk management process will help maximize your upside potential while protecting your portfolio from a large drawdown.
This market will continue to flash new signals and Big Wave Trading will be all over them. While we do follow quite a bit of stocks, we continue to encourage traders to follow 5-10 stocks at any given time. Focus on the stocks best fitting your risk profile. Concentrate on the best and apply a solid plan of action. Anything else will be a difficult path forward.
This market is not an easy one to get involved with by any stretch of the imagination. Focus on the best available stocks in the market. We do not know when a turn will happen or if we continue to hit new all-time highs. The future is unknown, and we only know what has happened. Best of luck this week and we hope you had a tremendous weekend.
