Once again, we see the market tipping on the edge. The S&P 500 is dancing around 1955 and the Dow is burrowing beneath 17,000. One difference this time around is the VIX is sporting a handle of 17.25, a bit closer to the 21.5 level, another technical ceiling of note. The question, though, is this anything more than what the market has done over the last five years – churn about, consolidate, and then move another leg higher?
- Frankly, it has got to be frustrating to be a bear these days. For all of the talk of technical divergences, sentiment extremes, narrow leadership, geopolitical issues, social unrest, and secret meetings between Fed officials and Wall Street bankers, the bears have very little to show for their efforts recently.
It is true. Year to date, the S&P is just about 7% higher, and the Dow is up as well year to date. If the movie were to end right now, the good guys would win. Of course, the movie will not end right now, but the reality is the good guys are winning, even with the recent spate of bear attacks. And why is this? Why isn’t the market rolling over whenever the breathless media features those who pronounce it dead? Simply, the bulls (unlikely predators they are) are always lying in wait …
- It appears that traders have seen this movie before. They’ve seen this scenario play out over and over and over again in the last few years. And by now, pretty much everyone knows that the hero doesn’t die in the end. And everyone also knows that the battle cry to making money in this market is to “just buy the freaking dip!”
I appreciate David Moenning’s thinking on this and, BTW, BTFD is the acronym he coined for this now five-year-old pattern. And a pattern is, especially come autumn. The market tests its lows, churns about, and then pushes higher in the fall and early winter and all this after a “scary” summer of deadly pronouncements and predictions of doom. The breathless media has to fill the vacuum of summer with something tantalizing, so they trot out all the hill-top screamers and bearish celebrity analysts just to make sure we are paying attention.
Apparently lots of us are not paying attention anymore, even as the market flirts with breaking through its floors, a time of plenty for the doomsayers always present in the breathless media.
- It’s hard to exactly determine why CNBC’s viewership is bouncing around near all-time lows along with its revenue, but as the recent Nielsen Ratings demonstrate there could be a problem in what some consider the land of Wall Street gloss and cheerleading.
CNBC and Fox Business News (FBN) are known for featuring the darlings of Wall Street, true, but they are also the worst offenders of fair play when they consistently offer up the bearish celebrity analysts and the ever-faithful to the apocalyptic prophecy. The good news is they are losing viewers.
Okay, so less folks are watching CNBC and FBN, so does that mean the market is more faithful to reality? Frankly, it doesn’t make any difference who watches which financial news program. More powerful forces drive the market. One of those powerful forces is the technical analysts out there.
Currently, the bears and the bulls are fighting over technical levels. The bears did not like it when the bulls took the market through the ceiling and the bulls don’t like it when the bears try to take the market through the floor. Hence, the extant trading range.
Today we are at the low end of that range. Will the market crash though? As always, we will see, but at the moment, both the Dow and the S&P are coming off the lows, which means the bulls are BTFD.
In any case, my bet is on the market doing what is has been doing for five years. Technical levels aside, there is no fundamental reason the market will do anything else.
Trade in the day; invest in your life …
