Today was one of those days that looks good if you just consider the closing numbers, but much less positive if you consider the intraday action.
The market gapped up and then did absolutely nothing. Breadth deteriorated steadily and the vast majority of stocks closed lower than they opened. We did stay positive, and the Nasdaq led, so give the bulls respect, but they have had a tendency to be very lazy following these big gap-up opens.
The challenge of this market is that we have good underlying support but very little strength other than the gaps that we had three Tuesday mornings in a row. It is much harder to catch the recent strength than many people think. Obviously, the buy-and-holders are happy no matter how the market gains. But for active traders, this environment makes it very hard to have good long exposure at the right time.
One positive for the bulls today was that the poor earnings report from Citigroup (C) didn't do more damage. Financials were the primary laggard today, but the pullback was mild and there didn't seem to be any great worry, even with heavyweight Goldman Sachs (GS) on deck in the morning. On the other hand, C continues the pattern of weak earnings that we have seen so far this quarter, and you have to wonder if the market can shrug it off for long if the onslaught continues.
Overall, the market action isn't bad but it lacks energy, momentum and leadership. You have to respect the fact that we have good underlying support, but are the bulls going to grow weary if there isn't better strength aside from an opening gap?
Market action like this can stay sticky to the upside, but that doesn't means it's easy to ride strength.
Have a good evening. I'll see you tomorrow.
