The market had some optimistic headlines to work with Wednesday morning about a possible U.S.-China trade deal, but it turned into a dull session. Some strength in semiconductors -- the Vaneck Vectors/Semiconductor exchange-traded fund (SMH) -- thanks to Micron (MU) earnings helped the Nasdaq outperform, but the Dow Jones industrial average and S&P 500 were flat and the small cap iShares Russell 2000 Index (IWM) lagged. Breadth was positive, but the number of stocks hitting new 12-month lows expanded and exceeded the new highs.
In a dull market traders will seek out some action in certain sectors. They did that Wednesday and went wild over bitcoin, which made a huge move and is starting to look similar to the parabolic move that occurred last December. I'm using Grayscale Bitcoin Trust (GBTC) to play the action and at this point, and I'm inclined to just stay with it and see if a bubble of similar magnitude can occur.
When the last Bitcoin bubble occurred, a number of "junk" small caps that were supposedly tied to blockchain or cryptocurrencies in various ways went crazy. Riot Blockchain (RIOT) is one example, and that attracted speculative interest on higher volume today. A number of others like Aerohive Networks (HIVE) and Marathon Patent Group (MARA) are great for very short-term trading, but should not be confused with quality investments.
With the market waiting for some details from the G-20 meeting this weekend, it is likely that bored traders will continue to look for action in the Bitcoin and blockchain area. Hopefully, that speculation will expand a bit and give us more action, but the likelihood is the indexes are going to drift in a trading range.
The market action may be dreary, but there still isn't any major technical negatives. It is just the nature of the beast to go through dull periods at times.
