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Markets Still Stagnant in 2014, but Several Developments Could Shake Things Up
The overall market is challenging some big hurdles on the upside today.
Jeff Saut    

This article was originally posted on the Buzz & Banter where subscribers can follow over 30 professional traders as they share their ideas in real time. Want access to the Buzz plus unlimited market commentary? Click here to learn more about MVPRO+.

Is there anybody out there...
-- Pink Floyd, "Is There Anybody Out There?" from The Wall

Markets that go straight up are easy. Markets that go straight down, while painful, can be managed. It's the back-and-forth fluctuations that drive all but the most short-term traders and long-term investors crazy. 2014, so far, has been the year of the churn. You actually have to go back to 2011 to find action in the S&P 500 (INDEXSP:.IND) that resembles anything like what the market has experienced so far this calendar year. By comparison, 2012 and 2013 were the kind of markets that caused even average investors to believe they could quit their 9-to-5s to become professional day traders as the low for each respective year actually took place in the very first trading session. 2014, on the other hand, has been a very rude awakening for many who had forgotten what an extended consolidation looks like. Over the past 14 weeks, the S&P 500 has traded in a very narrow range of around 4%, with some false breakouts and breakdowns thrown in just to further frustrate its fickle followers. One might even describe the action as boring, which is why I have had the Pink Floyd song referenced above stuck in my head recently. Is there anybody out there, and are they willing to force this market to make a definitive move?

From a technical perspective there are a few interesting chart developments to which I would like to draw attention that could provide an impetus to action here soon. First, despite all the negative attention the small caps have received lately, it is important to note that the Russell 2000 (INDEXRUSSELL:RUT) closing low from February 5 has been threatened on no fewer than eight different occasions and yet has held each time on a closing basis. Someone is obviously defending the 1,093 level heavily, and I would be a buyer here unless it falls. The overall market is challenging some big hurdles on the upside today -- the Russell 2000 overcame its 200-day moving average and the S&P 500 is looking like it will break 1,900. Both indices opened today just below these points, and it will be interesting to see in the coming days if they can maintain their rallies. Moreover, if you look to the chart of the relative strength between the S&P 500 and the Russell 2000, the large caps have vastly outperformed small caps since early March (denoted by the near vertical movement upward at the far right of the chart), but the line is at possible resistance here and is the most "overbought" it has been since early 1999. With few exceptions, a healthy stock market is led by the more speculative small caps, and it should help break us out of the mire if this proves to be an inflection point in the S&P/Russell relationship.

Monday's Memorial Day holiday, however, marks the unofficial beginning of summer here in the US, and Wall Street recognizes this day just as everyone else does. Besides the small rallies by the S&P 500 and Russell 2000, there hasn't been much action today, perhaps due to a long weekend in everyone's sights. Traders may once again be asking, "Is there anybody out there" during this session, but come Tuesday, that will hopefully change.


Click to enlarge
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Markets Still Stagnant in 2014, but Several Developments Could Shake Things Up
The overall market is challenging some big hurdles on the upside today.
Jeff Saut    

This article was originally posted on the Buzz & Banter where subscribers can follow over 30 professional traders as they share their ideas in real time. Want access to the Buzz plus unlimited market commentary? Click here to learn more about MVPRO+.

Is there anybody out there...
-- Pink Floyd, "Is There Anybody Out There?" from The Wall

Markets that go straight up are easy. Markets that go straight down, while painful, can be managed. It's the back-and-forth fluctuations that drive all but the most short-term traders and long-term investors crazy. 2014, so far, has been the year of the churn. You actually have to go back to 2011 to find action in the S&P 500 (INDEXSP:.IND) that resembles anything like what the market has experienced so far this calendar year. By comparison, 2012 and 2013 were the kind of markets that caused even average investors to believe they could quit their 9-to-5s to become professional day traders as the low for each respective year actually took place in the very first trading session. 2014, on the other hand, has been a very rude awakening for many who had forgotten what an extended consolidation looks like. Over the past 14 weeks, the S&P 500 has traded in a very narrow range of around 4%, with some false breakouts and breakdowns thrown in just to further frustrate its fickle followers. One might even describe the action as boring, which is why I have had the Pink Floyd song referenced above stuck in my head recently. Is there anybody out there, and are they willing to force this market to make a definitive move?

From a technical perspective there are a few interesting chart developments to which I would like to draw attention that could provide an impetus to action here soon. First, despite all the negative attention the small caps have received lately, it is important to note that the Russell 2000 (INDEXRUSSELL:RUT) closing low from February 5 has been threatened on no fewer than eight different occasions and yet has held each time on a closing basis. Someone is obviously defending the 1,093 level heavily, and I would be a buyer here unless it falls. The overall market is challenging some big hurdles on the upside today -- the Russell 2000 overcame its 200-day moving average and the S&P 500 is looking like it will break 1,900. Both indices opened today just below these points, and it will be interesting to see in the coming days if they can maintain their rallies. Moreover, if you look to the chart of the relative strength between the S&P 500 and the Russell 2000, the large caps have vastly outperformed small caps since early March (denoted by the near vertical movement upward at the far right of the chart), but the line is at possible resistance here and is the most "overbought" it has been since early 1999. With few exceptions, a healthy stock market is led by the more speculative small caps, and it should help break us out of the mire if this proves to be an inflection point in the S&P/Russell relationship.

Monday's Memorial Day holiday, however, marks the unofficial beginning of summer here in the US, and Wall Street recognizes this day just as everyone else does. Besides the small rallies by the S&P 500 and Russell 2000, there hasn't been much action today, perhaps due to a long weekend in everyone's sights. Traders may once again be asking, "Is there anybody out there" during this session, but come Tuesday, that will hopefully change.


Click to enlarge
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
More From Jeff Saut
Daily Recap
Markets Still Stagnant in 2014, but Several Developments Could Shake Things Up
The overall market is challenging some big hurdles on the upside today.
Jeff Saut    

This article was originally posted on the Buzz & Banter where subscribers can follow over 30 professional traders as they share their ideas in real time. Want access to the Buzz plus unlimited market commentary? Click here to learn more about MVPRO+.

Is there anybody out there...
-- Pink Floyd, "Is There Anybody Out There?" from The Wall

Markets that go straight up are easy. Markets that go straight down, while painful, can be managed. It's the back-and-forth fluctuations that drive all but the most short-term traders and long-term investors crazy. 2014, so far, has been the year of the churn. You actually have to go back to 2011 to find action in the S&P 500 (INDEXSP:.IND) that resembles anything like what the market has experienced so far this calendar year. By comparison, 2012 and 2013 were the kind of markets that caused even average investors to believe they could quit their 9-to-5s to become professional day traders as the low for each respective year actually took place in the very first trading session. 2014, on the other hand, has been a very rude awakening for many who had forgotten what an extended consolidation looks like. Over the past 14 weeks, the S&P 500 has traded in a very narrow range of around 4%, with some false breakouts and breakdowns thrown in just to further frustrate its fickle followers. One might even describe the action as boring, which is why I have had the Pink Floyd song referenced above stuck in my head recently. Is there anybody out there, and are they willing to force this market to make a definitive move?

From a technical perspective there are a few interesting chart developments to which I would like to draw attention that could provide an impetus to action here soon. First, despite all the negative attention the small caps have received lately, it is important to note that the Russell 2000 (INDEXRUSSELL:RUT) closing low from February 5 has been threatened on no fewer than eight different occasions and yet has held each time on a closing basis. Someone is obviously defending the 1,093 level heavily, and I would be a buyer here unless it falls. The overall market is challenging some big hurdles on the upside today -- the Russell 2000 overcame its 200-day moving average and the S&P 500 is looking like it will break 1,900. Both indices opened today just below these points, and it will be interesting to see in the coming days if they can maintain their rallies. Moreover, if you look to the chart of the relative strength between the S&P 500 and the Russell 2000, the large caps have vastly outperformed small caps since early March (denoted by the near vertical movement upward at the far right of the chart), but the line is at possible resistance here and is the most "overbought" it has been since early 1999. With few exceptions, a healthy stock market is led by the more speculative small caps, and it should help break us out of the mire if this proves to be an inflection point in the S&P/Russell relationship.

Monday's Memorial Day holiday, however, marks the unofficial beginning of summer here in the US, and Wall Street recognizes this day just as everyone else does. Besides the small rallies by the S&P 500 and Russell 2000, there hasn't been much action today, perhaps due to a long weekend in everyone's sights. Traders may once again be asking, "Is there anybody out there" during this session, but come Tuesday, that will hopefully change.


Click to enlarge
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
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