"Don't wait for the perfect moment, take the moment and make it perfect."
Since hitting new highs on March 1 the indices have done little. There was a brief flurry of buying following the Fed interest rate decision last Wednesday, but it has been very sloppy action within a tight trading range. The Nasdaq has closed almost exactly at 5901 for four days now and the S&P 500 is in the same place it was seven trading days ago.
The bullish spin on this dull action is that it is healthy consolidation that is a set up for another thrust higher. We all know that you don't short a dull market and the pattern of the market for a long time is to spring to life just as the bears start to believe they may have an edge.
Although there have been periods of poor breadth lately, the action under the surface hasn't been that bad. There are some pockets of actions, most notably in biotechnology and semiconductors. Banks have rolled over since the Fed interest rate hike but the FANG names, especially Facebook (FB) and Apple (AAPL) , are holding the Nasdaq steady and there are still speculative traders trying to find the next "heater." (FB and AAPL are part of Jim Cramer's Action Alerts PLUS charitable trust.) There also was some good tradable action in names such as Aurinia Pharmaceuticals (AUPH) and Nektar Therapeutics (NKTR) .
While it has been rather boring action lately, the technical action has a slightly positive bias as there are some oversold readings after the flat action.
The bears' arguments remain largely the same as they have been for a while. They are convinced the Trump rally will come to an ugly end as fiscal policy goals are not met. When that is combined with more hawkish central banks and a long-in-the-tooth bull market, how can there not be a correction soon, the thinking goes.
The pessimistic arguments are logical and compelling, but the big problem for the bears is the same one that has plagued them for seven years. The price action simply does not confirm their fundamental arguments. The bears trot out some arguments about how extended things are and they always can go back to valuation arguments, too, but until the price action shifts there simply is no advantage in a pessimistic view.
Many bulls, including me, wouldn't mind seeing an end to the streak of 109 days without a 1% pullback in the S&P 500, as it would create some interesting volatility to trade. Markets that take a sizable hit now can produce good opportunities. But instead of trading volatility, we need to stay focused on catching momentum, and when momentum slows there isn't that much to do. That doesn't mean we should be bearish, but it is easy to let a dull market make us more negative.
We have a little strength in the early going. There isn't much news on the wires, but we are oversold and its "turnaround Tuesday," so why not buy something and try to make some money rather than waste time predicting how this will all come to an ugly end?
You're Invited ...
Wall Street Goes to Washington. In the first of a series of conversations with President Trump's economic advisers, acclaimed author and columnist Michael Wolff will sit down with Trump insider Anthony Scaramucci, co-founder of private-equity firm Skybridge Capital. They'll discuss the Trump administration, Scaramucci's thoughts on the policies and regulations under debate and his outlook for the next four years. Join us for this cocktail party on Monday, March 27, at The Metropolitan Club in New York. The event is free, but seating is limited and reservations are required. For more information or to RSVP, email firstname.lastname@example.org.