Stocks Climb Higher but Volume Ends Mixed

Market pundits continued to focus in on Goldman Sachs and bond yields. Volume was below average across the board, but higher on the NASDAQ. While there is a lack of above average volume price action remains positive. The day’s gains were solid with small cap stocks leading the market higher. While the NASDAQ and are at multi-year highs the Russell 2000 continues to remain below its multi-year highs. There are negatives to point out, but the market remains in an-uptrend and at multi-year highs.

An interesting development is what we saw from sentiment indicators this week. The development there is the big disconnect between the two. Respondents to the AAII survey were more bullish than last week ending at 45.61% bullish. Bears edged lower coming in at 27.2%. On the other hand the number of II bullish respondents (Investment Advisors) dropped to 43.6%! Bears remained flat at 26.6%, but the real story was the number of bulls jumping ship despite the market being at multi-year highs. Sentiment is very hard to trade off of, but it is clear the crowd is NOT widely bullish here.

Fighting the trend is something MANY try to do yet continue to fail. We see all over facebook, twitter, and other mediums traders and investors alike are trying to pin the top of the market. We will not do that here with our trading. Now, we can guess whether or not there is a top and debate our points for fun. There is zero chance we’d ever allow ourselves to “pick” or “call” a top as no one knows when an actual top has occurred. It is a game no one has mastered and the greatest traders of all time did not make a living “calling tops.”

It is a bit concerning volume had a tough time climbing above its 50 day volume average. Even though volume was higher than yesterday it certainly doesn’t feel like the market is real active. The market is giving off the feeling it is going to fool quite a few folks and force them to sell their holdings way too early. I could be wrong and we reverse tomorrow and head into a new downtrend. For now, there certainly is a feeling the market will continue to move higher methodically forcing scared traders selling too soon. Using a disciplined, rules based system allows us to remove the emotion from our trading. Rules keep us out of trouble and ready to ride big gains!

Enjoy the rest of March Madness and do remember to cut those losses!