In 1841, Ralph Waldo Emerson wrote, "A foolish consistency is the hobgoblin of little minds, adored by little statesmen and philosophers and divines." Ralph wasn't writing about the stock market, but if he was a trader, the foolish consistency of the current market is worthy of his contempt.
The S&P 500 traded in one of the narrowest ranges in nearly three years and the intraday pattern of action repeated a number of times. The other foolish consistency of this market is that a few big-cap names have been holding up the senior indices. If you eliminate those stocks, all the indices would look very much like the Russell 2000 ETF (IWM) .
The IWM is holding support, but it is looks nothing like the Nasdaq 100 (QQQ) , which is still extended and hovering at all-time highs. If we merged the QQQ with the IWM, we would end up with a chart that looked much like the S&P 500 ETF (SPY) .
The saving grace of this market has been that there are some pockets of stock picking that are working. Most of these have been earnings plays like The Trade Desk (TTD) today, but if you have been selective there have been some decent opportunities. We aren't seeing bear market-type action where traders are anxious to dump anything in order to raise cash.
I've been leaning a bit bearish lately with some index plays, but have been happy with some of the action in individual stocks I've discussed. If those trades start to dry up, I'll be much more worried about this market and will press index shorts, but it isn't happening yet.
I try very hard to stay focused on the action that is in front of me and not anticipate. There is actually some good action in places, and no matter how much I want to pursue index shorts, I have to keep that in mind. We will know when the long trades stop working. When that happens, we can start to worry.
Have a great weekend. I'll see you on Monday.
Cocktails & Cramer
Join Jim Cramer on May 23 for an exclusive party at Bar San Miguel, his Brooklyn tavern.
You'll get to watch a screening of Mad Money, after which Jim will arrive fresh off the CNBC set to mingle, pose for photos and answer your investing questions.
Participants will enjoy dinner, drinks, an autographed copy of Jim's book Get Rich Carefully and a free one-year membership to Action Alerts PLUS, Cramer's VIP club for investors. (Current AAP members will receive one extra year of membership for free.)
When: Tuesday, May 23, 6-9 p.m. EDT
Where: Bar San Miguel, 307 Smith St., Brooklyn, N.Y.
Cost: $375 per person
Space is very limited, so click here to reserve your ticket to this exclusive event today.