Stock market trend: Sideways
Market Pulse
Boy have I seen this pattern before. IBD confirms a new uptrend. Market Edge shows a broad technical improvement to the market. Talking heads say get in while the getting is good – and don’t worry about the weak volume. Shall I be seduced?
I don’t think so. All I need to do to be convinced that this is another harlot is to look at the one-year chart of SPY. For starters, you can see a clear range bound market since May.
You can also see that prior to this range-bound pattern, SPY peaked at a little over 120 for the year in April and right now it’s just below the short term high of 112 that it reached in the Summer run-up from July 2.
It was that Summer run-up that was the last Temptress that sucked in a lot of retail investors and then slammed them with a sharp 10% decline. Trust me, only the Big Money Computer Traders are making out like bandits in this kind of sideways environment.
So in order to tempt me, SPY has to blow past 120 with above average volume and broad sector support. In order to do that, the economy is going to have to show a lot more strength. Until then, cash is king.
