Lack of Downside Creates Downbeat Market

 | Mar 20, 2017 | 4:31 PM EDT
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The most notable characteristic of the market lately has been lack of volatility and emotion. Nothing seems to have much impact on the price action. We have had a few brief sparks of action on comments by the president and the Fed decision, but then we quickly revert to very slow and tight trading ranges.

The last time the S&P 500 declined more than 1% was 109 trading days ago on Oct. 11, 2016. I'm not sure that is a record, but it's likely very close. When the market finally does have a greater than 1% correction, it is going to cause some surprises because many have forgotten what that feels like.

The lack of downside isn't particularly good for traders, but what is worse is the lack of volatility. The Nasdaq closed today at 5901; on the three prior trading days it closed at 5901 on Friday, 5900 on Thursday and 5900 on Wednesday. Neither bulls nor bears can make money trading that sort of action.

There are a few individual stock picks working, but this market is in dire need of some emotions. News events don't seem to have any impact and there isn't even enough movement to apply much technical analysis.

The conventional wisdom is that this sort of action will eventually lead to a big move. The key word here is "eventually." There is no way to know when we will see a shift in market character. All we can do is stay vigilant and keep on slogging. This is a market that will reward persistence rather than insight.

Have a good evening. I'll see you tomorrow.

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