While the market action has been sluggish and dull lately, there have not been any major technical negatives. The indices have consistently shrugged off early weakness and closed near the highs of the day. There has not been a close at the lows since March 22, which is an impressive run.
The action has not provided as many good trading opportunities as it did earlier this year -- especially for swing traders -- but there is some decent day trading, and a few names like Disney (DIS) and Apple (AAPL) have made some strong moves lately. As earnings season progresses, there should be some better opportunities as volatility picks up. The report from Netflix (NFLX) after the close on Tuesday will be of particular interest.
The market is simply experiencing the normal ebb and flow that develops within a larger uptrend. After a strong run, it is necessary for some rest to occur. Shorter-term market players will want to lock in gains and new holders will not be inclined to chase extended stocks even higher. It takes some time for the transition to stronger hands to occur -- and that is what we have been seeing for a couple of weeks now.
Once again, strong economic news out of China is causing early strength. The People's Bank of China injected additional liquidity, and there were also some upbeat comments by Larry Kudlow about progress in the China trade negotiations. In Europe, German sentiment improved and that added to the positive tone of action.
While the action has been slow and choppy lately, the uptrend has persisted. This sort of action often causes market players to start looking for a major turn, simply because they are anxious to be doing something. They don't want to just sit there and wait for the market to consolidate. They want to make major calls and more dramatic action. Rather than listening to what the market is saying, they want to project their hopes and inclinations on to the action. There simply is nothing going on technically right now to justify any major market call.
We have a strong start to the day and there will be plenty of speculation about Netflix's earnings tonight. Last quarter NFLX surprised to the upside, but after a gap-up open, it traded lower over the next couple of weeks. Expectations are low and there is concern about the new competition from Disney, but the stock has a history of positive surprises.