Stocks were unable to hold early gains, and the S&P 500 is now sitting at the lows it hit on Friday. There is a gap under these levels down to the Thursday close at around 4365, and many technical traders will be looking for that to be filled before support occurs.
Breath is still positive with around 4700 gainers to 3200 decliners, and we had almost 300 stocks hitting new 12-month highs but what we are missing is a good dose of 'Fear of Missing Out.' There isn't any strong conviction that the lows are in, and, therefore, there isn't any great anxiety to rush to put cash to work. The trading action is ok but not strong enough to cause FOMO.
This is just a continuation of the bottoming process, and it is developing in a positive manner. Many market players think that the only constructive market action is when everything goes straight up, but it takes time for support levels to develop. It is the process of retesting lows that helps to build technical strength over time.
I remain optimistic that conditions for some good action during earnings season are developing. Some traders are impatient and frustrated, which is understandable and actually makes me feel even more comfortable that the market is currently doing the work necessary to set the stage for more energetic upside.
I still have very high levels of cash and would like to put it to work, but the price action to do so just isn't there right now.