Crude oil headed to $51 a barrel giving a boost to energy names. Volume was mixed, but today NYSE volume was higher and NASDAQ volume was lower. Price action continues to remain in our favor and with very little sell stops hitting gives us a clue this market should continue to push higher. There are plenty of investors who are simply sitting this market out while we continue to make gains. Stop trying to rationalize this market as it will keep you focused on all the wrong things. Stick to what matters and stay with Big Wave Trading.
Many pundits like to talk about what may take down this market. The common arguments typically are valuation arguments where the market is too overvalued. We know valuations are high right now, but they have been high for quite some time now. If there is anything that can take down the market is a big spike in inflation. Inflation signs have been popping up and we can certainly see it in DBA and DBC. Most have kept an eye on the energy side of the inflation equation, but other commodities are now showing inflation may be knocking on the door putting the Federal Reserve in an interesting position.
If inflation kicks into high gear the Fed will have to raise rates to combat inflation. How will the higher interest rates impact the Government’s ability to fund interest payments if rates jump high due to high inflation. Remember all the hyperinflation talk back in 2008-2009 as the pushed its QE program. Anything is possible and we are not predicting hyperinflation is around the corner. Keep an eye on inflation figures.
We will continue to just executing our strategy and making sure our position sizes and exits are on spot. There is no need to be a hero and go rogue. Let’s finish out this week strong.
