Another day and we saw the market sneak out gains. This market has been unrelenting and as we close out 2019 our mission remains the same. One thing we know is this market has defied the objections of many. Those who have convinced themselves to be out of the market have been left behind. Whatever the reason, political or otherwise it has not been a wise move to sit this market out. Opinions are very dangerous when we trade with them. Sure, we all have our opinions. However, when we trade based upon those rather than facts misfortune appears. The 10-day moving average continues to be a good spot to watch for, but from a longer-term perspective this market is good shape. While this may change, we have our stops in place and will re-evaluate as the environment evolves.
This year has been a great year for the market. The NASDAQ Composite is up nearly 33% year-to-date and the S&P 500 is not far behind at 27.35%. Sure, these gains are not normal by any stretch of the imagination. Given where we began the year many thought we’d be down 30% or more let alone a positive gain. It pays to not trade on your opinions of the market. Rounding out the major indexes the Dow Jones Industrial Average is up 21.18% and Russell 2000 is up 22.91% for the year. Large cap technology stocks continue to win the day. Will this change as we proceed into 2020? Stick with Big Wave Trading as we uncover stock market gems.
An argument may certainly be made for what traders are paying in terms of earnings multiple. The S&P 500 trades at 21.26 trailing twelve months (TTM) earnings. NASDAQ trades at 32.65 times TTM. Historically, we see the indexes trade in the mid-teens. Given the continued support from the Federal Reserve injecting billions still is likely the reason we see this market continue to gather support. Small cap stocks as measured by the Russell 2000 trade at 37.39 times TTM. While we may find this comical it is not a reason to automatically short this market. We must remain focused on the price action of our holdings and the overall market. Everything else is simply noise. Focus on what truly matters: Price.
We hope you have a great day of trading as we look to close out this December with solid gains. Continue to stay focused and disciplined.
