A little disappointing, we did not see higher turnover on Monday as we saw stocks post solid price gains. Monday’s session had the opportunity to be a really great day. Institutions weren’t willing to accumulate shares at a high enough clip. Yields rose a bit coming off their most recent lows. The Dow Jones Industrial Average was the lagging index today but was followed closely by the Russell 2000. This market still sits on shaky ground and one must remain vigilant. We would love for this market to continue marching higher on increase turnover. However, odds are still favoring we see at the very least choppy action. Our focus is to make sure our risk management strategy is on point preserving our capital. When a rally has the proper odds, we will need enough dry powder to take advantage. Come join Big Wave Trading and get the advantage when these storm clouds clear for this stock market.
Monday’s session had the opportunity to be a really great day for stocks. Price action was solid, but volume simply was not there to support the move higher. This does not mean we have impending doom about to hit stocks. We could very well see stocks push higher from here. However, since we lacked volume and saw a distribution day the next day after a follow-through day, we must stay aware of the downside risks. Odds of a newly formed rally failing is at 95% when a distribution day occurs following a follow-through day. Those odds are telling, but we are not going to automatically assume this market will crater. So far, we have seen the market stabilize albeit on decreasing volume. Remain calm and focus on what matters: Price.
As we close out summer trading, we have yet to see the US and Chinese governments come to an agreement on Trade. Conventional thinking would say the stock market would roar and bond yields would float higher. We are not going to argue one way or another on this. This way of thinking may be the right way and we see it come to fruition. Unfortunately, conventional thinking and the obvious tend not to work in this market environment. We can blame algorithm trading and others but really its only to give aid to our ego because we are wrong. Most cannot handle when they are wrong and seek to blame everyone and everything but themselves. Skip the need to feed your ego by being right in the market. Stick with price and a sound risk management process and you will have success in the stock market.
We hope you have a great Tuesday and look forward to solid price action from this market.
