For the past few months my morning has started with me staring at a blank screen. My thought process goes back and forth from contemplating my navel to how I’m going to say that the market remains stuck in a range and make it sound interesting. It’s a good thing I had the vision to name my column Random Thoughts. I suppose I could talk about the latest celebrity news but I would never stoop so low as to use the latest buzz words such as Bruce Jenner (or I guess now Bruceanne), Kayne West, Suge Kight, or Lindsey Lohan just for search engine hits. I also refuse to talk about Kim Kardashian’s latest wardrobe malfunction-let’s just say that the Paparazzi weren’t the only people taking pictures at the Grammy’s.
I suppose I should just say it. The market is stuck in a range. The Ps (S&P 500) are trading just about where they were 3-months ago. Ditto for the Quack (Nasdaq) and the Rusty (IWM). Speaking of the Rusty, on a net net basis, it’s trading just about where it was in late 2013. If you’ve had a hard time catching trends in smaller cap issues then look no further than this barometer.
As mentioned on Monday, things have unraveled a bit. The shot across the bow in interest rates kept areas such as Utilities and Real Estate soft. It is too soon to know if this will be the catalyst for a top here and if other areas will follow suit. Now’s the time to pay attention but continue to wait and not anticipate.
Rather than waste words explaining how many sectors are range bound, just look no further than the major indices. You can’t catch a tan when the sun isn’t shining and you can’t catch a trend when there is none. Therefore, for the most part, let everyone else fight it out. In the meantime, focus on those areas that can trade independently of the indices.
With that said, I still like the Gold stocks but the emerging trend here has been frustrating at best—lots of fits and starts.
Oil itself (USO) has triggered a Pioneer First Thrust Pattern. So far, a bottom appears to remain in place here. Full disclosure: Me and my peeps are long the ETF.
So what do we do? Again, focus on those areas that can trade independently of the indices such as the aforementioned commodities. If Oil can continue higher, we should see a plethora of setups in the Energy stocks soon. Other than that, continue to let everyone else fight it out. This is a market where return of capital is more important than return on capital.
Best of luck with your trading today!