Monday’s trade kicked off in a positive manner where buyers went to work for the first 30 minutes bidding up stocks. Where it went south was just after 2:30pm EDT. Sellers nearly erased the gains from the morning. The last 30 minutes of trading saved the day for the market. Positives on the session certainly are the NASDAQ and Russell 2000 indexes are trading above their 50-day moving averages. We still have not seen the Dow and S&P 500 move above their respective 50-day moving averages. Trading volume on the session was lower across the board as with most Monday’s. As we move into Tuesday we will get some geopolitical news as the President of the United States will announce whether or not the US will back out of the Iran Nuclear deal. We won’t be escaping geopolitics any time soon no matter how much we’d like it to go away. We will be keeping an eye on whether or not we see the S&P 500 can regain its 50-day moving average along with our holdings. As always our focus will remain on price action and manage our risk.
What is most important is how our current holdings are acting. Our strong risk management allows us to really focus on the winners in the market. We stick with them and dump losers. Since we sit in strong stocks they will tell us the story of the market. Is it healthy? So far we are cautiously optimistic, but we are heading into a weak seasonality period. “Sell-in-May” research will certainly flood market commentary and it will appear as very compelling. Do not simply sell because its May, but sell because a position hits an exit signal. Trading by the seat of your pants will end up destroying your capital. We have seen it far too many times where traders do not have a trading plan. This is nothing new despite what a few Twitter gurus would have you believe. Trading isn’t rocket science, but where people fall down is they allow their ego and biases overrule their trading system.
AAPL is nearing the trillion dollar market cap. Monday’s action wasn’t too inspiring but headlines will be following the stock and waiting to see if the stock is able to be the first ever trillion dollar market capitalization. Checking in on other FAANG stocks AMZN still is chugging along. NFLX continues its dominance. GOOGL is hanging tough, but has a clear line in the sand for support. Any break of support and it is obvious where it goes.
We hope you have a great week of trading.
