A positive reaction to earnings from three big banks had the market off to a good start, but the bulls couldn't generate much additional energy. Breadth was quite good at around 2-to-1, but the indices stayed in a range all day and there were quite a few fades in individual stocks.
There were some pockets of action like Tesla (TSLA) , Netflix (NFLX) and in biotechnology like Sarepta (SRPT) and Achaogen (AKAO) ; however, we continue to see quite a bit of rotation, which makes it hard to catch sustained momentum. There were more than 400 new 12-month highs, which tells us speculative interest remains high.
Overall, the indices are in good shape and the DJIA is in position to try to take out that 20,000 level. We have two events that may serve as a catalyst. First is that earnings season starts to pick up. We have reports next week from Netflix, Citigroup (C) , Goldman Sachs (GS) and IBM (IBM) . We still have some big guns down the road, but we should have some indication of a theme for the quarter. (Citigroup is part of TheStreet's Action Alerts PLUS portfolio.)
The second event is the inauguration on Jan. 20. This has no direct market impact, but it's a milestone that can serve to trigger trades. We'll be hearing much more about the "buy the election, sell the inauguration" trade next week. The gist of the logic is that the market has grown too optimistic about how quickly effective fiscal policy can be implemented.
The skeptics have been gloriously wrong about all things Trump and the "sell the inauguration" trade is awfully obvious. I suspect we will see a high level of volatility before there is any major change in the market trend.
Have a great long weekend. I'll see you on Tuesday.