Four days into this week and the market is still, how shall I say it, on the fence. There are not enough sellers to drag the market down too far and buyers are not willing to commit wholesale to drive the market up too far.
· U.S. stocks dipped on Wednesday to snap a six-session winning streak as gains in Boeing and Gilead were offset by slides in AT&T and the wider biotech sector.
Today appears no different than yesterday when the market ended up slightly in the red. One can see ambivalence in the price action of the DIJA, the S&P, and the NASDAQ. Of the three, the NASDAQ seems to be the most coveted, which is nice to see after the drubbing it has recently taken.
The VIX is telling me there does not appear to be much fear in the market. Over the last five days, the index has risen a mere half point, which leaves it in the mid-thirteen range, hardly a place projecting fear. Some will argue it shows complacency, and they might be right, but will such minimal movement, I argue it bolsters the notion of ambivalence. So, what is the market waiting for?
Earnings are good and the consumers are happy, which are the two of the most solid economic and market fundamentals.
· Caterpillar on Thursday posted a quarterly profit that topped analysts’ estimates and raised its full-year outlook on a stronger-than-expected rebound in sales to the construction industry.
· Consumer confidence rose last week to its highest level since August as Americans were more upbeat about being able to provide for their families than at any time in six years.
So, again, what is the market looking for? Is Ukraine an issue? Is it waiting to get more of a handle on earnings? Is it buying into the notion of an overvalued market or the fact that the bull market is five years in the making and it must fall of its own weight?
As I write, the three big indices, as well as the Wilshire 5000, the Mid-Cap, and the Russell (small-cap) indices have made a strong turn into the green. My trading portfolio has turned into the green as well, after a morning of being in the red from the get go. Does this mean the market will hold onto the gains and start going with the fundamentals?
This is one interesting part of playing the market. One never knows because the market does what the market wants to do day in and day out, despite what it should do day in and day out.
- Orders for long-lasting U.S. manufactured goods rose more than expected in March and a measure of business capital spending plans surged, bolstering views of an acceleration in growth in the second quarter.
Rationally, the above data, along with the uptick in consumer confidence and the rising employment in the US, as well as the good economic news coming out of Europe, and the mild economic news about China should give the market a strong boost, yet, ambivalence still reigns.
One can find many and varied explanations for this behavior out there in the analytical universe, but, in the end, it simply comes down to this – the market is unsure about the future, for whatever reason. The good news is the market is not freaking out about that.
For me, I still find my market life boring. This month has been lackluster for me – very little movement on the trading side. Yes, I have bought quite a bit, but I have not yet sold much as the upside to the market has been limited. Sell in May? I hope so …
Trade in the day; Invest in your life …
