Despite gapping higher to start the session Wednesday’s market saw stocks move lower. Volume was higher across the board. Not really a good signal but given the V-shaped rally we have this may be par for the course. The Dow remains the black sheep of the bunch as it sits below its 50-day moving average. Is this a big deal? Time will tell, but clearly the Dow hasn’t been the place to be. A few days of consolidation is not a bad thing by any stretch of the imagination. However, we need to avoid further distribution and find some support. If the market cooperates we may see solid handles in place giving us proper buying points. Now, only if the market would do as we wish! We know it won’t and we can only control our entries, exits, and risk.
We are inching ever so closely to what is anticipated as another rate hike. It will be interesting to see how the Central Bank will react to the tariff knows. The market is still anticipating another rate hike in June as the odds of this occurrence at 60%. This may certainly change next week, but most importantly it will be how this market reacts to the news. Will it like the Fed going slower? Any deviation from the current track may cause an issue, but it is anyone’s best guess. It is best we just work our process and control our risk. It sounds very mundane, but it is so important if you want to extract the most from this market.
Sentiment has crept back towards the bullish camp. Bears dropped below 22% for the week as many are looking for this market to head back towards hitting highs again. Bulls aren’t above 40%, but those who are bullish and neutral are just about even. We will see how we proceed and how this market reacts over the next few days as we head towards the next FOMC meeting next week. Never a dull moment in this market.
Keep grinding with this market. We have had some nice wins and have reloaded some hedges. Wherever this market wants to take us is fine by us. Keep grinding.
