Jobless claims and GDP did very little to shake the market one way or another this morning. Overnight futures did receive a boost when the Nikkei reversed its losses of more than 1% to close higher by more than 1%. Europe was mixed, but nothing notable to excite, nor spook the US markets. Trader Talk amongst those who attempt to make the news actionable is all over the noise coming from Washington D.C. Will there or won’t there be a deal is being blamed for the wild swings in the market. Sure, news scraping algorithms are going to go haywire and it is expected. However, this is no way to become successful in the market. Today’s close was inspiring and even ended the 5 day losing streak on the S&P 500. A good day for the stock market despite volume dropping on the day and we remain with this uptrend.
There are just too many breakouts going on in this market to really think we are going to enter any prolonged period of selling. We can certainly roll over at any point, but the evidence we have from our stocks and the market is we are going to continue to push into new high territory. We aren’t blind to the downside and when we get exit signals we’ll take them. However, we aren’t about to try and pinpoint for a turning point in the market. We’ll gladly ride this wave as long as we can to maximize our gains. Getting off the wave too soon can lead to pretty large missed opportunities.
Sentiment isn’t overly bullish or bearish for that matter. This past week the number of bulls on the AAII survey dropped to 36% while bears jumped to 31%. We aren’t surprised by this considering the one day wonder of the FOMC meeting reaction last week. Selling has persisted since we received the news the FOMC was not about to taper their QE soon. The Fed Chairman was clear the economy was not strong enough on its own to taper QE. But, was it anyone’s guess the market wouldn’t be at new highs after the announcement? It pays to listen to price and not try to predict the market’s reaction.
There is a rebalance happening at the end of this month with pensions. Maybe the selling we have seen is part of the rebalance pensions are making. It truly is anyone’s guess and one if we tried would in all likelihood get wrong. We are sticking with this rally and continue to pile on decent gains.
Have a great weekend!
