The indices continue to drift lower and breadth is running worse than 2-to-1 negative. It is one of those days that is driven more by a lack of buying interest rather than selling pressure. There just doesn't seem to be any rush to increase positions right now.
One of the biggest challenges of the market since last summer has been the very tight trading ranges that have lasted weeks. Back in August, the indices set some records for narrow trading and we have not seen a pullback of more than 1% in the S&P 500 since October. Following the post-election rally, we have had another tight range since mid-December. There have been a couple of thrusts higher, but the breakout attempts have failed to gain steam and there hasn't been any major selling pressure in months.
It is an uptrend, but it is not one that is enjoying the sort of momentum that makes stock picking easier. If you aren't in the right names, you will have problems. I'm having one of those days where I'm not in the right stocks. Some of the oils that I bought on Friday reversed sharply, a have a blow-up in Aratana Therapeutics (PETX) and a few other names I've favored are pulling back.
Last weekend I wrote about how we can't control our trading results. We will have both bad luck and good luck regardless of how hard we work or how smart we may be. All we can do is focus on our process. A good trading methodology isn't going to eliminate bad days, but over time it will help us produce superior results.
The big danger on a bad day is an emotional reaction. It is important to recognize the fact that bad days happen. If they don't, then you really aren't trading very aggressively.