Yesterday was one of the most boring, uneventful days of the year for the stock market. But boring action – during an uptrend – is bullish. It usually leads to even higher prices. The momentum remains bullish, and we’re looking for even higher prices later this week.
After consolidating in a tight trading range for seven sessions, the S&P 500 broke out to the upside on Friday. With some help from a bounce in the oversold oil sector, the S&P closed just under 2400. Most technical indicators are neutral. So there’s plenty of fuel in the tank for even higher prices this week.
The S&P 500 has been stuck in a 2380-2392 trading range for seven days. That’s enough to cause most traders to just chew up their accounts trying to make something happen when there really isn’t anything to do. At least, there’s not anything that represents a good risk/reward setup. Normally in the Market Minute, I dissect the daily action – which has been narrow and is now vulnerable to the jobs report numbers. Today, I wanted to share a little more of my trading philosophy.
Now that the Federal Open Market Committee (FOMC) meeting is out of the way, traders can shift their attention to the French election this weekend. The bulls are quickly running out of time to make their move. The seasonal winds blow bullish until about mid-month. Then the seasonal patterns turn bearish.
On Tuesday, the stock market gave us a carbon copy of Monday’s action. The S&P 500 was stuck in a tight trading range, with a slight upside bias. Today we have the Federal Open Market Committee (FOMC) announcement at about 2:00 p.m. ET. Nobody expects the FOMC to do anything about interest rates today. But traders will be looking for confirmation, or not, of a potential June rate hike.
Not much has changed since yesterday. The seasonal bullishness for the first trading day of May played out – though it was a less than inspired moment. The S&P 500 closed up 0.17%. The bulls still have the momentum. High-yield bonds and semiconductor stocks continue to act well – which typically leads the stock market higher. Most technical indicators are sufficiently far away from overbought territory to give the stock market plenty of room to push higher if it wants to do so.
The first trading day of May is typically a bullish day for the market. The S&P closes higher something like 70% of the time, and the average gain is around 0.5%. Most of the technical indicators are now back in neutral territory. So there’s room for them to move higher before getting overbought.
Here’s what to look for in the action today… General Trends After starting the week with a blistering two-day rally, the stock market has just chopped around for the past two sessions. We have to look at this as bullish action. Buyers are stepping up on even the slightest decline. Despite numerous caution signs, the […]
In today’s Market Minute, I’d like to share an idea that can make you a better trader. It's the one indicator I follow more than any other when I want to know where the stock market is headed next. It’s a twist on a commonly followed market indicator… the Volatility Index (VIX). The Volatility […]