A slight miss from GDP prior to the market open kicked the trading day off. Small cap stocks remain volatile with the Russell 2000 down more than 1% on the session. The S&P 500 on the other hand was able to close down just 4 basis points. Health care and Energy helped keep losses from the Utility sector weighing the entire index down. Volume was lower across the board as many traders were taking a breather. It was certainly a positive development for the market to see a tight pullback in light volume. Perhaps the only real blemish was how hard the Semiconductors were hit. As a group they were nearly down 2.5% with AVGO leading the entire group lower. Overall, today was a solid session where we did see real tight consolidation. Another day or two of this would bode well for this uptrend long-term.
Sentiment jumped week over week. No real surprise bulls jumped week over week. AAII bulls jumped to 40% while bears slumped to 20.59%. NAAIM exposure index ticked above 50% as the lower quartile moved above 0%. Active managers are slowly limping into this market and they still remain quite a ways from extreme levels. Even II Bulls haven’t eclipsed 50%! This market is up big from the 8/24 lows and many simply do not believe in this market.
Today’s session was a good day for those who are long this market. Aside from semiconductors there are plenty of nice patterns emerging. We have seen plenty of traders who are and continue to be cautious with this market. Trading scared is not the way you want to go. Missing out on huge gains is a great way to stay mediocre. We want to be in the top 1% of all returns and trading scared by playing not to lose will only lead to headaches. Play to win with us. Use coupon code: SCARY to take 30% off subscription prices. Act now as this deal will not last. Get to the next level!
The direction of this market is a fool’s game to guess. We have rules to identify trends and if we are wrong our exits provide our backstop. There are no special formulas except to cut your losers and ride your winners. Position sizing and exits are just as important as entries. Given the information we have this market continues to look like it will continue to push higher. If it does not we have an exit strategy. We really keep it plain and simple. No need to overcomplicate!
