A solid session all around as traders piles into stocks a day after the Federal Reserve released its policy statement from its most recent meeting. All day long stocks move higher with the exception of a blip just after 2pm eastern time. Volume according to Bloomberg fell day over day, but like we have noted in the past volume really isn’t going to matter to us much here. Bonds rallied too as bond traders adjusted to the Fed’s plan with interest rates. VIX ended the day with a 12 handle. The volatility index has cratered since the market was able to find support at its 50 days moving average. What a great session for the market and our end-of-day scans are frothy! It pays to stick with the trend.
Sentiment once again from the individual investor side was extremely bearish this week. It was somewhat a surprise after the major indexes were able to find support at their 50 day moving averages. Bears ended the week AAII Bulls came in at 38%. Bulls ended the week at 25%. Those who are neutral are still running high, but not a real surprise given most are likely checked out of this market. The continued bearish nature of the public will flip. At least the NAAIM exposure index indicated active managers increased their exposure prior to the Federal Reserve meeting. We never reduced exposure because we thought the market was about to crater. If a stock hit an exit signal we got out. Otherwise, we stuck with our process and continue to make gains!
There were plenty of stocks pushing higher. GOOGL (GOOGL) and Amazon (AMZN) are two juggernauts continuing their march into new high territory. Small caps stocks hit a new high today along with the other major market indexes. I am sure we can find bearish reasons from Zerohedge. However, for now, we will stick with our process and continue to make to pile on the gains. If this market was going to crater our stocks would hit our exits and short signals would be firing off. We aren’t seeing this situation. Therefore, we stay long.
Enjoy tomorrow’s action and the weekend. The first weekend of this fall season, make the most of it!