Just short of a nasty day in the market only a late day kick save helped alleviate some of the selling witnessed during Monday’s session. Volume was higher across the board and coupled with price declines the market notched a distribution day across all major market indexes. The S&P 500 was led lower by Health Care names. More specifically it was Health Care Providers and Services names doing the most damage. Monday’s session began well, but during the heart of the session sellers took control and sent the entire market lower. We did see a lift at the end of the session, but not enough to spark a lot of confidence we will see this market resume its march higher. At best the market moves higher, but what is more likely is some chop and slop as we consolidate the move off December lows. The trading session yesterday should be a reminder to all to make sure your position sizes and stops are on point avoiding unnecessary losses.
Perhaps the positive of the day was the NASDAQ’s ability to close above the mid-point of the session. We are not going to come out here and declare the end-of-the-day rally a victory, but something at least positive for our longs to hang their hats on. It should be clear to all chasing stocks up here is not a great idea and fresh breakouts are likely to have some trouble. Of course, we do not know the future and highly suggest a solid plan of attack. Knowing where you are going to get in and the risk you are taking on is paramount. Again, if you do not know your open risk you should cease all trading activities and devise a plan as soon as possible! The market is very unforgiving and especially to those who do not have the discipline and plan of attack.
Going forward we would love to see the market consolidate over a multi-week period. It would go a long way to help strong stocks to separate further from the pack. Constantly moving higher does not bode well for the long term. We cannot predict the future and can only trade the market in front of us. Most will try and trade the market they want. This is a very dangerous game to play. Find strength and stick with it. There is nothing new in the stock market. Only the participants change. We aren’t reinventing the wheel here, but continuing to highlight try and true methods.
We hope you have a great week of trading! Spring is nearing and we are in a seasonally positive period for stocks. Keep grinding!
