Small Caps Lag Broader Market while DC Gridlock Likely
Stock Market bulls were happy to see the market continue to add to gains on Wednesday after the Presidential Election was held. While we do not have a winner, it is looking like we will get gridlock given the outcome of the House and Senate elections. We are not political analysts nor pretend to be anything close. What is important is the price action of the stock market not our opinion of what might happen. A good sign for the NASDAQ was the push off its 50-day moving average with higher volume. On the flip side, Small Cap stocks did not see the same price gain. Volume was higher for the day in IWM, but we didn’t see the push in price gains as the other major market indexes. Regardless of how one feels about the market or election we need to focus on the price action of the market and leading stocks. Ignore the noise and continue to focus on price action and risk management.
GOOGL had itself a day on Wednesday helping to push the NASDAQ up 3.85% for the session. When large stocks breakout into new high territory is something to take note of and watch how they react to those new highs. AAPL and AMZN while not breaking out are setup to have a one. Not guarantied by any stretch, but both stocks are poised to push higher. BOTZ and SNOW are other interesting stocks to keep an eye on as we move forward. There are always opportunities out there if you can set aside the noise and narrow your focus to what truly matters your trading performance will improve.
Seasonality wise is we are heading into a positive portion of the calendar. This is 2020 mind you and anything is possible. However, given some of the positives in the NASDAQ it would not come as a surprise to see this market continue to push higher. Have a plan of attack including a way to control your open risk for the opportunity to take advantage of what the market will give us.
Where we go from here is not what we need to be focused on. Too many will try and figure out where this market is headed only to confuse them further leading to poor trading results. Let’s make sure we are focused on what improves our trading performance and leave everything else behind.
