Financials Lead Stocks Higher

For the second straight day this week the market is able to find enough buyers pushing this market higher. The Dow Jones Industrial Average marked its 17th record close since the election as Financials lead the market higher. Led by Banks, specifically Regional Banks were the biggest benefactor of today’s gains. Higher rates are going to benefit banks and money continues to flow to them. Volume was on both exchanges were higher today, but just above yesterday’s turnover. The next two weeks we wouldn’t expect to see volume jump significantly as many take time away to enjoy the holiday season. We will continue to hang onto this trend as it appears we are going to continue to push higher. While we still remain overbought there is no telling when we will actually enter into a new downtrend. Stay the course.

Financials are all the rage given the Federal Reserve now expects to have 3 rate hikes next year. Let’s not forget this time last year the central bank saw 4 rate hikes in 2016 and we got one. Right now, the next rate hike according to market odds won’t occur until the June 14th meeting with 70.8%. May’s meeting only has a 42% chance of a rate hike. There is no chance of a rate cut in any meeting next year. Surprise! Most banks are out of reach from any reasonable buy point. For now, it is all about managing the position in accordance to proper exit rules.

This rally can end at any moment, but we are just not seeing any evidence it is about to fall on itself. Do not over think this market. Many will try and all of them will fail. Stick with the process and continue to grind.

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