Tuesday, April 6, 2010

Just Don't Trade....

Although the Dow industrial average was slightly negative, the other major indexes gained slightly, and overall breadth remained quite good, with about 3,200 gainers to 2,450 decliners. Regional banks, retail and oil led, while biotechnology, chips and home builders lagged.

Once again, the dip-buyers provided very strong underlying support and prevented any real selling pressure. The bears are totally incapable of digging a claw into this market. At some point, we are going to be hit with some severe selling, but many market players have been expecting that for weeks now and are just becoming increasingly frustrated as we keep on ticking up.

Little is changing from day to day. We have good breadth, light volume, a high level of complacency and no volatility. It is a great market to sit and hold, but very challenging to trade, since there is little to do but chase strength and hope the momentum continues.

Keep in mind: Earnings season starts soon. That will be the main market driver for the next few weeks. Clearly, this rally over the past two months has raised expectations, increasing the danger of a "sell the news" reaction. But, as we all know, it isn't a smart move to anticipate any weakness in this market. Nonetheless, the traders are hoping to see some better volatility as the earnings reports roll in.....

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