It was an extremely dull day of action Monday. However, the early weakness was bought and the buyers ran stocks up into the close which gave the indices and upbeat feeling.
Breadth was very poor with around 2,900 gainers to 4,350 decliners, small-caps lagged and volume was extremely light. Still, the senior indices held up and remained in an uptrend.
Under the surface there was quite a bit of weakness, although strength in oil names and a late bounce in FAANG stocks attracted some interest. Oil was the standout group, along with a few other pockets of strength such as Qualcomm (QCOM) and old favorite Pyrus International (PYX) .
If the adage "never short a dull market" actually holds true then this market is set up for some very strong action. We'll see if earnings news stirs up some energy. Twitter (TWTR) , which reports in the morning, is likely to be the most entertaining.
While it may seem trite, there is some logic to "never short a dull market." When markets are slow and boring it is much easier to be surprised by good action rather than bad action. Market players tend to be more defensive when things are dull so when the action starts to improve, they have to reposition quickly in order to profit. It is easy to see why it might be a good idea to be a bit cautious but much more difficult to be energetically bullish.
This market may be dull and the internal action weak, but it is still healthy and the risk is to the upside.
Have a good evening. I'll see you Tuesday.
