No Market for Stock Pickers

 | Nov 29, 2011 | 4:33 PM EST
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It was a mixed and choppy day of trading with the DJIA acting well while the Nasdaq struggled. Oil, commodities and retail led while financials and technology lagged. Market players kept one eye on Europe but nothing new developed there, so we had no clear drivers. The better-than-expected consumer confidence numbers this morning helped a little, but were soon forgotten.

After a big move like Monday's, the important thing is that we not give back too much too quickly. We want the short-termers and flippers to exit but dip-buying interest should prevent too much of a pullback. It is helpful if volume recedes a bit after a spike but it has been equally slow on both days, which is a little troubling.

I continue to believe that conditions are ripe for another one of those low-volume, V-shaped moves that causes so much consternation for bulls and bears. All the conditions are in place, including a high level of skepticism, many underinvested bulls and the need for end-of-year performance. Seasonality is a potential plus as well.

On the other hand, any technician looking at the chart of the Nasdaq or the S&P 500 won't even want to discuss bullishness until we are back over the 50-day simple moving average at least. The overhead resistance we face is formidable and the potential for negative news is high. You have to be a real contrarian to find much to like in this market.

My biggest complaint is that this market still is not very rewarding for stock pickers. Good charts are tough to find and the momentum action is nearly nonexistent. As a result, many folks are sticking with the exchange-traded funds, which is part of the reason that we end up with these low-volume rises.

I remain optimistic, but not heavily invested. I'm hopeful we'll have an opportunity to be more aggressive as conditions evolve. The key is to stay mentally prepared and be ready to act when the opportunities become clearer.

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



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