It has been a tough trading environment recently, but traders are hopefully that tomorrow's inauguration will provide a little energy. The indices again traded within tight ranges, but this time there was a slightly downward bias. Early strength in the Nasdaq 100 (QQQ) faded as the day progressed. Breadth was quite poor as it approached 3-to-1 negative.
Given all the recent talk about the Trump inauguration being a negative catalyst, I suspect the action today was largely anticipatory. Traders were trying to front-run the trade and may have actually created conditions for a rally instead. I believe the chances of that are quite high and I eliminated some index shorts for that reason. If Trump can stick to his script tomorrow, his speech may be an excuse for some buying. It may be a good setup for squeezing some shorts.
Despite the generally poor action, there was some interesting action in technology names like Nvidia (NVDA) , Acacia Communications (ACIA) , Finisar (FNSR) and a number of chip stocks. Follow-through has been the missing ingredient lately, so it is tough to be very aggressive, but some of the technical setups are looking good.
Trump will be sworn in tomorrow at noon ET and his speech will follow. Traders will be keying on this and I expect to see some better volatility for a change.
The "sell the news" trade seems very logical, but we may have already priced it in and it may be too obvious at this point. My money is on the bulls tomorrow.
Have a good evening. I'll see you tomorrow.