It was a slow summer Monday with a hangover feel, but stocks slowly improved most of the day and closed well off the early lows.
Breadth improved nicely, but it ended up slightly positive with around 4,300 gainers to 3,600 decliners. The number of new 12-month highs improved nicely to around 525, but there is a substantial number of stocks below their 200-day and 50-day simple moving average. It has been a narrow market for a while, and it is the small caps that are still lagging.
In addition to the underperformance of many stocks, we still see almost daily rotation. Monday the banks, semiconductors, and oil bounced back, but biotechnology and some of the "shutdown" names lagged. Trying to catch sustained momentum in this market has been a major challenge, but the good news is that there are not a lot of extended stocks or frothy action.
We have some earnings reports in the morning from Goldman Sachs (GS) and JPMorgan Chase (JPM) , which should provide some insight into the market mood as we head into earnings season. Banks will be particularly interesting as they have been quite volatile due to fluctuating interest rates.
This has been a challenging market to navigate, because the market has been inconsistent. There is enough strength to prevent all aggressive corrective action, but there is enough weakness to prevent confidence from building.
I see plenty of stocks that I believe are good values, but the lackluster prices action is preventing me from doing much buying. There isn't much to do but wait for conditions to shift.
Have a good evening. I'll see you tomorrow.