A roller coaster day in the market ends with prices near unchanged for the day. As noon time rolled around it appeared as if sellers were going to push the market much lower. Only to see buyers gain the upper hand and set a new high just before the last half hour of trading. Sellers won that last 30 minutes pushing the S&P 500 back to negative territory. Volume was mixed on the session with volume higher on the NASDAQ and lower on the New York Stock Exchange. The NASDAQ was the leading index on the session closing in positive territory, but just by a whisker. This market still remains in a position to push higher, but we seem to fail to get the push from buyers.
The current consolidation period has forced a few traders into overtrading. We have yet to see a market consolidate this way in quite some time. Just look at last October it did not take long for the entire market reverse back and hit new highs. December was the last time we saw a new high and it has been almost a month and a half. Many will get impatient with the market and make poor decisions based up on the need to do something. We will simply wait for our signals to show up and properly manage our stops and position sizes. Stick with the game plan and remain patient until the right opportunity presents itself.
One group of stocks has a big potential to move with force. Small Cap stocks have essentially stayed flat for an entire year. They have been unable to gain enough support for the group to hit new highs. All the attention over the last year has been large cap stocks and Utilities. Keep an eye on small caps to be the next leading index.
While we still remain in a volatile environment and within a consolidation period does not mean we get complacent. Same goes for the inverse. We cannot overtrade either. Striking the right balance is crucial to our success.
Stay focused, disciplined, and cut those losses short.
