Futures were dealt a blow with news out of Europe regarding the largest publicly traded Bank in Portugal was once again in trouble. European shares were sold off in heavy volume and at the session open US stocks followed. However, not long after the open buyers began to scoop up shares and push the US market higher nearly erasing all the early morning losses. The massive support can be viewed as bullish, but we still remain in neutral mode until further evidence can support higher prices. Our focus remains on our holdings and if price dictates otherwise we’ll remain on the long side of this market with a hedge. Although we are long we remain vigilant and will change course if necessary. Today was certainly wild and now has many market pundits second guessing their view. Our view simply remains steadfast with our process and so far it has produce excellent results.
Sentiment did not shift much this week and continues to remain at the same levels. AAII survey remains neutral as the small investor simply does not know what to believe. Bulls were at 37% and bears at 28%. The AAII Survey continues to be far from any extreme readings. Perhaps, the neutral reading is extreme? NAAIM exposure index ticked higher to 82 with not one survey respondent with a bearish bet. Will we ever see extreme readings? It is not likely any time soon given the current market conditions.
At today’s low the McClellan Oscillator was well below -150 an extreme oversold reading. We are not too far off the market highs and for the oscillator to get oversold so quickly likely points to this market’s downside to be limited here. Another clue the downside may be limited is volume. Volume was absolutely huge today pointing to big institutional support for this market. Many will claim various reasons we should roll over, but the support we are seeing could very well shove aside calls for a correction. The key will be not to panic and stick to your process and trading plan. Do not deviate from it. If you don’t have a plan, come join us. There is only one week left to take advantage of our 30% off sale. Simply use the coupon code: “JULY4” and save!
Go out and enjoy this coming weekend. Life is meant to be enjoyed the way you find it enjoyable. We’ll see you back next week!
