The bulls aren't hitting any home runs, but they keep scoring runs and are doing what is necessary to win the game. The indices managed some minor gains and breadth was only marginally positive, but we had some names like Amazon (AMZN), Facebook (FB), Ambarella (AMBA) and Tesla (TSLA) attracting interest. Small-caps exhibited relative strength and we ended the day near the highs. It wasn't very exciting, but there was a positive bias and the bulls keep chugging along.
Once again, the old cliché about it being a "stock picker's market" was apt. That is just another way of saying the indices are dead, but some stocks are moving. While that is a good thing for traders, it isn't particularly bullish because it means there are still plenty of stocks not participating. In very strong markets, you will be bailed out of poor stock picks, but that is not the case now.
Probably the most positive thing about this market is that it refuses to be nervous about Greece. There still is the chance that a deal will not be struck, but this market seems to have no doubts there will be some positive headlines to spike things higher. The fear of missing out is far greater than any worries about the ridiculous political process that is involved.
It is very easy to be too cautious, but if you stay focused on individual stock picking, you can ignore all the macro predictions. It may feel like a very slow pitcher's duel, but the home team is on a winning streak.
Have a good evening. I'll see you tomorrow.
June 23, 2015 | 1:32 PM EDT
Waiting for the Word From Greece
- · Until something concrete comes out of Greece, don't expect much market action.
The most notable characteristic of the market action today is that it is totally dead. The indices are close to flat, breadth is slightly positive and there isn't much going on. A few momentum names are moving around a bit but if you are looking for excitement, you'd be better off at the beach.
Ironically, Greece is probably helping to hold things steady. More positive headlines about a deal are widely anticipated, and we all know that those always produce automatic spikes. Why bother betting against this market before we have the climatic "Greece is saved!" rally?
The good news is that although the action is dead, it still has a positive bias. The market is still in a technical uptrend and above all key support levels. It may not be making much progress but there is still very stubborn underlying support. Until key levels as lost there is no reason to make any big bets against this market.
In some ways, a default by Greece would be a gift for traders, as it would be a surprise and would create strong emotions. Market players just don't seem to worry about anything and it would certainly be a change of pace for actual bad news to catch people by surprise. However, even then I'd expect the dip buyers to immediately jump in and push us right back up.
We are seeing a slight uptick in the action as I write, but until we have something more concrete about Greece, don't expect to see much happen.
Jun 23, 2015 | 10:50 AM EDT
A Tough Market to Chase
- Traders just need a few good movers to feel good about the action.
The recent market pattern has been slow but positive action. There is still dull action, but with narrow pockets of strength and a number of names showing strong relative strength. That helps to keep sentiment positive, which also keeps dip buyers alert. Traders just need a few good movers to continue to feel good about the market, but it is worrisome that there is so much downright boring action.
In the early going, small-caps faded slightly but breadth was just slightly ahead with about 2,650 gainers to 2,500 losers. We don't have any standout sector action, and the only thing that doing much on the momentum screen is Ambarella (AMBA), which is bouncing back.
May's new home sales numbers were ahead, which is giving the indices another push higher, but this is an extremely tough market to chase. Market players are anticipating another spike higher when news of the inevitable Greek deal is announced but they are rather sanguine about the whole issue.
Second Sight (EYES) gapped up good news and continues to be a good trading vehicle but I have very little else on my radar. There are a few things with good bases -- FMSA Holdings (FMSA), eHi Car Services (EHIC) and Oncothyreon (ONTY) -- but they aren't moving much.
Jun 23, 2015 | 7:09 AM EDT
Be a Bull; You Have No Other Choice
- Expect more positive headlines out of Greece.
"It does not matter how slowly you go so long as you do not stop".
The indices are set for to follow through to the gains produced by yesterday's optimism over a deal with Greece. Unfortunately, the Greek saga continues to drag on, but the good news is that market players appear anxious for more positive reactions to any headlines about progress. The computer programs are automatically buying the headlines, and that is sucking in buyers that are afraid of being left behind again.
Despite the generally positive bias to the market action, it has been very slow progress this year. This is the worst performance for the first half of the year since 2010 and, according to Bloomberg, the S&P500 hasn't had a move of over 2% in 126 days, which is the longest run since February 2007.
In other words, it has been dull action. Market players are growing tired of looking to Greece and the Fed's interest rate hike intentions as being the main driving forces in this market. The bears keep warning us of the possible negative outcomes, but the market just keeps plodding along in very unworried fashion. Of course, even that complacent reaction is seen by the eternal pessimists as an indication that doom lurks around the corner.
Although the indices are lurking at new all-time highs, the most common description of the action recently is that it's a "stock pickers' market". If you want to make any decent progress, there really is no choice but to put your money into individual stocks, rather than the indices. The S&P500 is up just 3% so far this year, but there are a slew of individual stocks that have trounced the indices, and that has to be your focus if you are looking to outperform.
While traders like the idea of being rewarded for astute stock picking, it isn't always a good sign. This sort of action is a function of a narrow market. The indices aren't moving much, because the majority of stocks just aren't doing anything.
Yes, there is some "good stuff" and maybe the bulk of stocks are just resting and consolidating gains before they attempt another leg to the upside. The bearish spin is that stocks are tired, and that the narrowing strength is an indication of a topping process that is slowly developing.
If you look for problems in this market, you can find them, but that has not been very productive. While the action has been slow and narrow, it is positive, and you simply can't argue with a market where the Nasdaq and the iShares Trust - iShares Russell 2000 ETF (IWM) are hitting new all-time highs. It may be tempting to proclaim this to be the last hurrah before interest rate hikes kick in and the market tops, but haven't we being hearing that for six years now?
It should be painfully clear that trying to predict when this market will top is an exercise in futility. The approach that has worked and continues to work is to stick with the trend -- no matter how slow -- and keep looking for reasons to be positive. It is the Pollyannas that have produced the best results, while the doubts and pessimists have constantly struggled to keep pace.
We are very likely to see more headlines about Greece which will prop up the market. We never seem to completely price in the good news of a Greece deal, and that precludes any sort of "sell the news" reaction.
The quarter is winding down and there is plenty of performance anxiety, which also augers well for the bulls. It may not be a hard-charging bull market, but there is no choice but to be a bull.