The S&P 500, via the (SPY) , managed to kiss the lower end of my $262 to $267 range yesterday as we touched $262.80 intraday. And then sellers greeted us today with a reminder that volatility remains in play. That being said, do I dare claim the start to the day has been a bit boring? And even good for bulls?
Yes and yes.
No, volatility is not coming in, but if we are to move higher, we need a little backing and filling so as to not get over-stretched to the upside without developing any higher low support levels. I doubt this move is shaping many buyers from Tuesday or Wednesday. Heck, I doubt it is shaking anyone but late-day Thursday buyers thus far.
The underlying action appears more controlled, but also very correlated. Over the past few weeks it seemed when we had moves of 3% to 5% on the indexes, I'd see most of the names in my watchlist moving twice that level. Today, it appears virtually everything is moving the same amount. There are a few outliers, but not nearly what I've seen over the past few weeks.
This is the action I want to see, I like to see, for those wanting to affirm we have a market bottom in play. I've heard from several traders, myself included, who described today as boring. We've gotten accustomed to the wide swings, but the wide swings are not healthy for the market long-term. Neither is a VIX above 60, so we need some tight range days. Relatively flat days would be an even large help, so if the market could just have a week with all the moves below 1% or even 2%, that would be great.
Unfortunately, we are still seeing some dash for trash, huge bounces on truly beaten-down names. SmileDirectClub (SDC) and Tilray (TLRY) are two of the leaders in this group. Several of the cannabis names are seeing some dumpster diving. That was a good sign yesterday that we'd gone too far too fast without a little reprieve.
The weekly picture on the major indexes has improved, but there's still a lot of work to do before I'd call them bullish in any fashion. It's tough to even label them neutral at this stage, but the daily picture has significantly improved across the board. It appears as if many individual names put in bottoms between March 18 and March 23. Each name is different, but I would use the CLOSING low of that period as my line in the sand for individual stocks. Many have long intraday tails that stretch well beyond the closing low, but focus on the low close as that is where true support should sit. The intraday moves were fast and volume thin, so it's closing lows only for me.
It's Friday. Stay safe out there. Weekends have been feast or famine for both bulls and bears, so keep that in mind if you are rolling the dice as there's probably several hundred basis points on being right the moment we open Monday.