We have a classic example today of some "don't short a dull market" action. There isn't any significant news flow, it is peak vacation season and the indices traded in a tight range for much of the day. Despite the dullness, breadth was 2 to 1 positive all day and some of struggling technology names managed to bounce.
What happens on a day like this is that the sellers can't generate any traction so the traders that are hanging around decide we might as well buy them instead. They aren't convinced that there is a lot upside but the odds of making some money are better on the upside than the downside.
These bounces in names like Nvidia ( NVDA) and Netflix ( NFLX) look more like selling setups rather than the start of major recoveries but when the action is dull and slow it is easier to play the bounce than to try to short it.
There is a peculiar dynamic because many people expect the market to be slow and dreary but then we have 2 to 1 positive breadth even though many of the key leading stocks aren't doing much. There are more pockets of weakness than there are outstanding pockets of strength.
This sort of action is a good example of why it does not pay to try to anticipate a market top. The negative narratives may sound logical but they are having no impact on this market overall. When the price action starts to reflect some pessimism then we can take a more bearish approach but there are no signs right now that this market is going to suddenly turn down.
I'm taking some time off this week to unwind before the kids start back to school next week and will be posting on a sporadic schedule.
Have a good evening. I'll see you tomorrow.
