New Highs Within Reach; Earnings Continue

Earnings season is now in full swing as we continue to see companies’ top estimates. Will earnings be enough to push this market back to all-time highs will be interesting to watch. IWM still remains stuck in a rut while SPY, QQQ, and DIA look poised to push into all-time high territory. There is still headline risk lurking out there as we have yet to see a deal closed between the United States and China. Of course, there is always the risk of a tweet from the US president. However, the market overall is setup to push higher. All we need to do is be in the right stocks and control our risk. Everything else is not important to our trading process. Price rules all. Futures are pointing to a slightly higher open Monday morning and we are ready to go.

When will IWM start to lead is a great question. Since the beginning of March, we have not seen the group make any headway. While the rally off the lows from December of 2019 were solid IWM has simply stalled out. There could be and are many reasons behind the lack of movement. What we do know is the group has a whole have gone nowhere. We want to be in stocks within a group pushing higher and leading. IWM has yet to lead and perhaps at some point they will. Until then, we want to be on top of the leading stocks in the leading groups. It is just that simple. No need to over complicate things and spend countless hours figuring out why. Price is what pays.

Friday’s session was an interesting one to witness. At one point during the day it appeared, we were going to succumb to sellers. However, we were able to stabilize and fight off sellers to close with support. Now, it was not the greatest of days for bulls. However, it was nice to see support hit the market and perhaps a signal of things to come. Avoiding distribution going forward will be important as well as healthy action in leading stocks. We must be vigilant with our exit strategy as we never know when this market will turn against us. Protecting our downside is vital to our success. It allows us to stay in the game taking advantage as much upside as we can without the drag of heavy losses. Keeping money in winning trades and exit losers is a strategy all the greats have employed. We are not making anything new up. 

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