Luckily for the business media, they can talk about a record high in the DJIA because, under the surface, this is a very dull market. Over the last 10 days, the S&P 500's closing range has been seven points or 0.2%. There has been a little better movement in some of the other indices, but the choppiness has made it tough to navigate.
A year ago, we had a nearly comatose August. There were some records set for flat action that lasted for weeks. I am concerned we are going to see a repeat of this sort of action. The market doesn't seem to react to any news, and with earnings season winding down soon, there aren't many catalysts.
Last year, the very flat action resolved itself with a slight downtrend into the election in November before a major turn occurred. Bulls often look for these dull trading ranges to resolve themselves to the upside, but there is no guarantee that will be the case.
Apple (AAPL) earnings are solid and the stock is seeing a strong positive reaction. The stock is trading up around $7.50, but the conference call is to come and that could have an impact. Expectations were quite mild for AAPL overall, which is why we are seeing this reaction. (Apple is part of TheStreet's Action Alerts PLUS portfolio.)
If nothing else, Apple should help keep sentiment positive. We'll see if its earnings shake things up a bit for the broader market, but I'm looking for a continuation of this tight trading range with limited volatility. To deal with this sort of action, you either use very short-term trades or take a longer-term horizon. The middle ground is murder when the indices aren't moving much.
The Apple news is unquestionably positive, but the big issue is whether it can generate better market volatility. If Apple sentiment doesn't spill over to the broader market, it is going to be a very slow August.
Have a good evening. I'll see you tomorrow.