First off, I slightly missed the mark yesterday with my intuition. I suggested that if the market show signs of going green, the bulls would jump on board and make the day a green day. Fine, but I followed up with this.
- My sense, though, is the bulls are not quite convinced and the bears are.
The comment above clearly suggested a “hedge” in my bet, which suggests that I am not so certain about the market right now, as the market is not so certain about itself. Understood. With earnings done, the big economic data out, and a yeh, yeh, yeh mindset about geopolitics, the market has no real catalyst, thus, it finds itself not sure on any given day what to do.
So, the market waits for the next round of big “news,” but while it is waiting, it trades up and down within a specified range. If this range-bound trading happens long enough, the market consolidates, which means the investors carefully pick their spots to buy or otherwise just hold on. Mostly, though, the traders buy and sell, which makes the market go up and down.
- The President’s new, more aggressive campaign against ISIS appears to be spooking investors in the early going today.
So something such as President Obama announcing a more aggressive approach to solving the problem of the absolute dangerous crazies trying to take over the Middle East with their 5th century thinking sends the market screaming into the red. Add that to the breathless media filling the aforementioned void with constant chatter about the Fed.
- The primary issue facing stocks at this time is the debate over when the Fed will alter their guidance on monetary policy. Several sources have reported this week that there is growing discomfort internally at the Fed over the “considerable time” verbiage relating to how long rates will remain at zero after QE ends.
No, the primary issue with the market is investors have no real reason at the moment to be aggressive, so traders buy up and sell down. Back and forth we go.
- When dealing with trading ranges in the markets, the tricky part is to determine when the range has been broken versus when the range has merely been expanded.
The above sums up the problem for the market players when markets are range bound. Most folks in this this game will tell you the answer is found in the technical set up. I generally agree, but I would add that in this market, don’t be concerned with a break out either way, at least not yet. The market will need a catalyst to break out to the upside or the downside, and if it goes up, it won’t go far, and if it goes down, the same.
As I have said before, traders trade on the technical set up and now we have a traders market, so, watching resistance levels top and bottom here is important, for no reason other than to know when to buy or when to sell within the range.
If you miss it on either side, don’t fret. Timing the market perfectly is, well, difficult at best. Staying within the range, however, is not nearly as difficult, so one has a real chance to make money in a range-bound market. Again, until we see a reason, and I mean a “real” reason for a breakout, trade the range in whatever market you trade.
- Ironically, retail investors are not as gung-ho about the market as in the past. Viewership of financial television programs is at 20-year lows, especially in the coveted 25-to-54 age group. It’s a sign that even as the market climbs higher, interest in the stock market is falling along with volatility.
The above comes from an article discussing why the market will not break out to the downside, hence the word “Ironically.” The author’s argument is interesting, but the part I find more interesting in the above is that fact that viewership of financial television is dropping among the younger set of investors and traders.
I get it though. I am not in that age group (missed it by that much), but I too have given up on most financial television. The reason is it is not helpful to my work. It has become most celebrity analysts and talking heads that often make “much ado about nothing.” We should not underestimate the intelligence of the younger set. They are on to something.
Trade in the day; invest in your life …
