Stocks Stuck?
Despite the financial media's attempts to dramatize stock market action, it sure looks like "stuck" best describes recent action. Up and down they go, supposedly responding to this or that headline. The stories about China, world economic slow down, Fed decisions, etc. may engage some. Frankly, I'd rather stick with the daily news, something that usually takes about 30 seconds to a minute each morning unless something momentous is going on.
So instead of adding another "spin" to the spate of stories about what's going on, how about a quick look at a 6-month weekly chart of the S&P:
With the usual disclaimer that I'm no technical expert, I think we can get something out of this.
First, notice how recent price action has held above the 200-day moving average. That's considered bullish. Next, see how the 50-day moving average has formed a kind of saucer or bowl shape from the beginning of December unil today. At face value the left side seems to want to push the 50-day above the 200-day, which would, again, be considered bullish.
Ofsetting this we could offer something we mentioned last time: the recent AAII Sentiment Survey that showed decidedly bullish sentiment which, as noted, typcially should be considered a contrary indicator.
Now, admittedly, these are a select few facts in what - if we wanted to - would be an ocean of data. But it does speak to this "stuck" idea. Choppy price action like we've seen, after that plunge in December and recovery in January, typcially indicates indecision. Traders aren't too sure what to make of things.
That doesn't mean some view or other won't eventually prevail. In fact, something's going to give one way or the other. We just don't know which way or when.
One result of this lack of conviction: holding larger cash positions. And why not - at least with your more speculative allocations.
Meanwhile, tuning out works well too, especially if you're not an active trader. Otherwise, it'll be like listening to your favorite recording repeat a 2-second loop because the record is damaged.
Record? What's that? Maybe I should have said "CD." Oh, right, it seems most of us listen to streaming music, right? Maybe I should just stick to stocks. Of course, stocks are stuck. So I guess that means I'll stick to to stuck stocks.
So instead of adding another "spin" to the spate of stories about what's going on, how about a quick look at a 6-month weekly chart of the S&P:
With the usual disclaimer that I'm no technical expert, I think we can get something out of this.
First, notice how recent price action has held above the 200-day moving average. That's considered bullish. Next, see how the 50-day moving average has formed a kind of saucer or bowl shape from the beginning of December unil today. At face value the left side seems to want to push the 50-day above the 200-day, which would, again, be considered bullish.
Ofsetting this we could offer something we mentioned last time: the recent AAII Sentiment Survey that showed decidedly bullish sentiment which, as noted, typcially should be considered a contrary indicator.
Now, admittedly, these are a select few facts in what - if we wanted to - would be an ocean of data. But it does speak to this "stuck" idea. Choppy price action like we've seen, after that plunge in December and recovery in January, typcially indicates indecision. Traders aren't too sure what to make of things.
That doesn't mean some view or other won't eventually prevail. In fact, something's going to give one way or the other. We just don't know which way or when.
One result of this lack of conviction: holding larger cash positions. And why not - at least with your more speculative allocations.
Meanwhile, tuning out works well too, especially if you're not an active trader. Otherwise, it'll be like listening to your favorite recording repeat a 2-second loop because the record is damaged.
Record? What's that? Maybe I should have said "CD." Oh, right, it seems most of us listen to streaming music, right? Maybe I should just stick to stocks. Of course, stocks are stuck. So I guess that means I'll stick to to stuck stocks.
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