This Flat Market Action Is Just What the Doctor Ordered

 | Feb 16, 2017 | 2:23 PM EST
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For traders, it is a relief to see the pattern of straight-up action finally come to an end. It is great for existing positions that you may be holding, but it doesn't provide many new trading opportunities. When the only choice you have is to buy grossly extended stocks, it doesn't make for very good trading.

Keep in mind that the overbought conditions that have been created by this rocket ride higher can be remedied quickly. The market doesn't need a major pullback. A few days of flattish action will be all that is needed to reset some stocks. A brief pause will refresh the bulls very quickly.

It is also important to note that there is a big supply of folks that have not fully participated in this rally. Straight-up markets create much frustration, and those that are left behind do not want it to happen again. They will keep this market from falling very much, at this point. The market is not going to suddenly reverse and go straight down. Be ready for new setups to develop as this consolidation takes place.

The market is doing nothing at the moment, as it seems fascinated by this wild White House press conference. There hasn't been anything like this that I can recall -- and both the media and market players are flummoxed by it. Trump continues to make very market-friendly comments about taxes, Obamacare and fiscal policy. The media may despise him, but the market isn't at all bothered by the drama taking place.

We'll see how we close today, but so far this is the sort of action we needed very badly.

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