The stock market is the ultimate price discovery platform. SPY, QQQ, and IWM have had a great week of gains. There are positive signs a trade deal with China is certainly helping ease fears of a recession. Bond yields have shot back up and the yield curve is not inverted for the moment. Remember, seasonality is not with us. However, we must follow price and not ask questions. Our risk management process will help protect us from downside risk. Eyes will turn to the Fed next week and whether the central bank will cut its target rate. Friday’s market is set to begin higher as futures are indicating decent gains. It all boils down to price action of leaders and the overall market. Keep this in focus and ignore the noise generated from the street.
News over a trade meeting in October and delay’s in tariffs have helped ease the minds of traders. Yields and stock prices have moved in tandem. The number of Bulls in the AAII survey jumped 4.5 percentage points to 33.1%. Bears dropped 8.3 points to 31.3%. NAAIM Exposure Index jumped to 75% from the 50s showing equity managers were quick to jump back into the market. It would not surprise us one bit to see the sentiment indicators jump back into extreme territory. It will be interesting to see how the market reacts as we move through the month of September.
We want to focus what is in our control. Most traders tend to focus on items other than price action. Whether it be news or an emotion it is not the proper way to approach the stock market. Big Wave Trading has been around since 2007 and we have seen many traders come and go. We have stood the test of time and have demonstrated how you can be successful in the stock market. Stick with Big Wave Trading and we’ll help improve your trading results.
It has been one heck of a week. We hope you can get out and enjoy the weekend.
