The month of September continues much like it started. There is solid underlying support, very good breadth, outperformance by small-caps, over 600 new 12-month highs, strength in the FAANG names and new highs in the indices.
Some pundits, including those at the Wall Street Journal, attribute the continued strength to optimism about the impact of the Trump tax policy on the economy. That is a convenient explanation. However, I believe the more likely cause for the sustained momentum continues to be primarily structure. Positive price action begets more positive price action because that is what works best for algorithmic trading.
The biggest danger in this sort of market is to overthink it and talk yourself out of taking a trade because you are worried about a reversal. More money is lost anticipating a reversal than is actually lost in a reversal.
There are some big movers on my screen, including SMART Global Holdings (SGH) , Overstock.com (OSTK) , The Trade Desk (TTD) , Zogenix (ZGNX) , Nova Measuring Instruments (NVMI) and Jupai Holdings (JP) . I will consider adding to any of these positions as they develop further. On one level they all can be considered to be technically extended but that is the approach that works in this market.
I would not be surprised to see a dip in the action this afternoon as a function of profit-taking before the end of the month, but a short-term one is sure to attract buyers very fast.
