Solid Price Gains but Volume Indicates Institutions were Hesitant

Monday trading sessions tend to be on the lighter side from a volume perspective. However, given the level of price gains, we witnessed on Monday a rise in volume accompanying the gains was what we wanted to see. While we can’t have everything, we want price gains alone were solid for this newly confirmed uptrend. Whether it turns into new highs for this market remains to be seen. Given the election year and the debacle of the debate last week we should be in the ride of our lives coming over the next few weeks. There is a clear leader in the polls, but we all know what happened last time polls should a candidate in the lead. Our focus remains on the price action of this market and not who is going to win this election. There will be plenty of commentary slung around regarding what the market will do if either candidate wins. All the noise boils down to is nonsense. No one person can predict what the market will do next. What is in our control is our actions and it is precisely why we ignore the so-called stock market gurus. Stay focused on what matters.

Yesterday’s S&P 500 gains were mostly due to Energy, Information Technology, and Healthcare names. No surprise Real Estate, Consumer Staples, and Utilities lagged the broader market. Not too much to glean from the moves in sectors as many would expect in an uptrend for Information Tech to lead. Energy popped due to oil prices, but in the end, the sector does not make up a large portion of the index to really make a difference. Perhaps a good sign for this market to continue to push forward regardless of this election cycle.

Believe it or not, we do have another quarterly earnings season hitting the tape very soon. What should we expect from this earnings season? We really do not know for sure. Sure, we can say earnings expectations are one way or another. All we really control in the end is our actions and how we manage our risk in earnings season leading into the November presidential election. It is important to know when your holdings report and whether you have enough cushion to absorb any initial negative reaction in your positions. Managing your risk is the most important job you have managing your portfolio. It should always be your number one priority. This is not the time to be a hero.

We hope you have a great week of trading. No time to let up.