Another solid week in gains for the market last week. Capped by a better than expected jobs report Small Cap stocks led Friday’s gains. QQQs lagged but given the leadership since the beginning of April it comes as no surprise the other major indexes are playing catch up. The Dow put in a solid 3% day led by Boeing’s massive 11% day. Airlines are clawing back as well with economies beginning to slowly open back up. Where does this all end is anyone’s best guess. Our job is not and try to predict precise moves but be in the general trend. Since the beginning of April, we saw the market carve out a bottom and rise. No one knows where this thing ends or if it will ever end. Our job is to maximize our time on the wave.
Wasting your time on the why or when this rally will end only ends with you missing out on gains. Looking at the AAII survey it is evident that many in the survey are missing out on tremendous gains. AAII Bulls ended last week at 34.55%. Bears ended the week at 38.87%. They are missing out because of what they think the market should be doing. Once you realize you cannot control the market or know where it is headed your focus will shift in the proper direction. The NAAIM Exposure index does show active managers believe in this rally with the index sitting near 92%. It is the retail crowd not sure this market has sustainability.
AMD continues to work on a flat base. Large technology stocks have been the “go-to” in this market. AMZN and NFLX are two leaders still looking to hang onto their gains. Now, these behemoths do not produce gains in the 100% or more, but do provide a sense of direction in the market. As these stocks go so does the market. Keep a close eye on them as we proceed.
We have a new week upon us and another opportunity to increase our performance. Stick with a sound risk management process and your trading will continue to improve. We hope you had a great weekend. Now, it is time to get to work.
