The post Federal Reserve hangover was stronger than many expected as sellers were able to push stocks lower. Volume was lower on the session avoiding an all but deadly distribution day. We will need to see the market avoid a distribution day tomorrow as it would increase the odds this current confirmed uptrend. For the most part our large cap technology stocks were able to hold steady. A good sign for this market moving forward for now. Tomorrow’s quad witching session will increase volume and perhaps volatility. Stay the course.
In a good sign for this market moving forward those who were bearish in the AAII survey jumped more than 9 points to 39.4%. Not extreme, but is the highest reading in quite some time. Bulls dropped to 24% and neutral down 5 points to 36.8%. NAAIM exposure index ticked lower, but did not hit an extreme level. Sentiment has yet to hit an extreme level except for those who have been neutral. At the moment, there may be enough bearish sentiment to keep this market afloat for a bit longer.
Now we have the Federal Reserve out of the way the market will not be held back by the Fed. Of course, it won’t be until the next Federal Reserve meeting 6 weeks from now! In a few weeks we will get fourth quarter earnings. January can be rough for stocks and especially for small cap stocks. At the moment small cap stocks are lagging the broader market. It will need to fight seasonality in order to buck its current trend.
This year is coming to an end and what a year it has been. For most it has been a down year. Many of our subscribers have had good years in comparison. The bottom line for us is to continue to manage risk and continue to execute with flawless precision. There is no need to be a hero here either. Tomorrow will have some volatility with quad witching. Do not get over excited about intraday action. We hope you have a great weekend.
