Monday’s trading session was quiet as many Monday’s tend to be. Financials were the worst performing sector in the S&P 500. Bank earnings have come in a bit better than expected, but a flat yield curve is not inspiring a lot of confidence in the group. On the flip side, Consumer Staples led the gainers. For the day the S&P 500 was only down .06%. Small caps led all decliners down .36%, but overall a quiet day across the board. We are still waiting to see the Russell 2000 take over leadership. It would be nice to see small caps move higher while the NASDAQ and S&P 500 consolidate gains. Whatever the market direction we will certainly follow it. There is no sense in fighting a trend.
As the AAII Investor Sentiment moves to be more bullish the NAAIM exposure index saw active managers decrease their equity exposure. The market has done an incredible job of fighting its way back off the December lows. Remember, we were going to hell in a handbasket. Many active managers are likely sitting on some profits they would like to lock in and why we see the number decrease. Once again, we are not at an extreme by any stretch of the imagination just yet. Anything is possible and nothing will surprise us. We will continue to grind with this market and see where it takes us.
Hard to believe we are already half way through the Month of April. We will begin to hear noise regarding “Sell in May and go away.” Historically, this strategy has done a fantastic job. Recently, we have seen this market continue to make its way higher. There will be a headwind due to seasonality, but it does not mean this market cannot and will not move higher. Just pay attention to the price action and execute a sound risk management process. Too many do not and suffer dire consequences.
Please make sure you are checking your holdings for their earnings announcement. Those without cushion in a stock will want to make sure they are curbing their open risk. Earnings season is pretty much a crap shoot and anything can happen. Without cushion you can see 5-10% gains evaporate overnight. Not to mention if you have too big of a position size you run the risk of really damaging your trading capital. Due diligence is important here.
We hope you have a great, short week of trading!
