Summertime Trading Continues

The Nasdaq continues to be the clear winner in this pandemic. Volume has been what is expected from summertime trading: light. We see the S&P 500 flirt with all-time highs, but still unable to clear the hurdle. Lagging are the Dow Jones Industrial Average along with the Russell 2000. Money simply is not flowing into blue chips and small caps. Seeing small cap stocks lead would be a solid signal. However, in this new world of excess liquidity Large Cap technology stocks are benefiting the most. Traders and investors a like simply aren’t gravitating to risk. Our job is to control what we can control. Sticking to our process and ignoring the noise is the best thing we can do for our trading. Noise equals distraction and in turn leads us to poor trading results.

A slight change in sentiment last week as AAII Bulls top 30% in a long while. Bears remain on top at 42%, but down from high levels. Even with the rally in the Nasdaq the crowd simply has not turned to the bullish camp just yet. We’d imagine any hiccup in prices bulls will flee and are not taking a stand just yet. News headlines are not overwhelming bullish and given news organizations exist to sell you on ads fear is what sells best. Imagine missing the entire run up from April simply because you thought the market could not rally from where we were? It would be a difficult pill to swallow knowing you missed out on one of the greatest recoveries in history. Sure, it is Fed fueled and not sustainable, but the rally still happened. We cannot ignore price action and we cannot let our emotions get the best of us.

There is opportunity all around us and if we are willing to keep an open mind, we can take advantage of whatever this market will throw at us. Too often people are closed-minded and cannot see the opportunity. Continue to put in the time and effort. It will pay off in the long run and your account will thank you. Keep grinding.