Friday saw stocks rise across the board led by the NASDAQ 100. Yes, you guessed it right small caps as measured by the Russell 2000 lagged the broader market rising less than 1% on the session. Volume eased across the board indicating institutions were not in a rush to support stocks. The lack of volume is somewhat telling heading into the weekend when the risk of a headline is quite high given the current climate. All the financial media’s attention will be the upcoming trade meeting between the United States and China. No one knows whether a deal will surface, but our focus will be on price and our risk. Even if there is a deal struck there is no guarantee the stock market moves higher no matter how probable. We can only react to what the market is giving us. Currently, we are in cautious mode with our open risk in check. Steady as she goes as we head into the week.
What we saw on Friday is no real big surprise. The market did not have any groundbreaking headlines and institutions were certainly not active. QQQ, SPY, and DIA all reclaimed their 200-day moving averages. A good sign, but lacking volume is a bit of a red flag for us. Had volume swelled on the session it would have signaled institutions were piling back into the market. Unfortunately, we just didn’t see the velocity we needed from the volume side of the picture. Regardless, price gains were solid, and we must account for it. This wouldn’t be the first time a low volume v-shaped rally has taken place. Since 2008-09 v-shaped rallies are commonplace. Let’s be prepared and see how this market shakes out.
Thursday is going to be a big day for those who follow headlines. Until then, we will focus on what matters and that is price. Good luck with your trading this week it should be a fun filled week!
