PM: Here we go again

PM Update

The market challenges all-time highs, but comes up short again.  Will tomorrow finally be the day?  AAPL’s pause appears constructive.

MARKET BEHAVIOR

Stocks made a new 52-week closing high and are less than two-points from the all-time closing high.  Today was the sixth-consecutive alternating up-and-down day.  Volume continues declining between the holiday shortened week, spring break, and the last week of the quarter.  It seems like many traders already checked out for the week.

MARKET SENTIMENT

The all-time closing high continues eluding this market, will tomorrow be the day?  It was nearly two-weeks ago the first time we asked that question.  Will if finally happen Wednesday, or will the alternating pattern continue?

Volatility is humiliating both bulls and bears as it sucks in and spits out any reactive and impulsive traders.  The key to surviving periods like this is trading proactively by selling strength and buying weakness.  Often that means going against our gut, but that is precisely why it works.  Evolution wired all of us the same and what we feel is also experienced by most market participants.  To thrive we need to break free from the herd and chart our own course.

Volatility and turmoil is a key sign of market tops, but it also signals consolidation and continuation.  If this were easy everyone would be rich.  It seems some of the bullishness is wearing off as we stall at these levels and the bears coming out of the woodwork again.  By itself that does not signal a continuation because at some point bears will eventually be right.  The question is if there are still too many bears out there?  We will have our answer soon enough.

TRADING OPPORTUNITIES

Expected Outcome:
I keep asking questions because the market is giving us few answers.  The battle between bulls and bears is fairly even here.  My bias is with the bears, but I could easily see bulls pulling this off one more time.  We can talk about this stuff until we are blue in the face, but the truth is we are simply killing time until the market reveals which way it wants to go.  At this point it seems just as likely we finally set the all-time high as break down.  But there are different consequences for each.  Rebuffed by 1565 one more time is far more damaging for bulls than finally closing above this level will be for bears.  Bears have lost this fight for a while and one more setback is not a big deal, but the first bull loss is far more significant and signals a potential change in personality.

Alternate Outcome:
Markets rarely give us this long to sell the top.  Holding these levels thorough Monday clearly shows bulls are still in control.  If the market doesn’t break down over the next couple days, look for the continuation.  Maybe the continuation is one last push through all-time highs at 1576 and only lasts a couple of days, or maybe we rally through the summer before resting.  All we can do is follow the markets lead and pick up the clues it gives us.

INDIVIDUAL STOCKS

AAPL took a break, but is still above the 50dma.  There was a lot of chasing as it finally broke above this widely followed moving average for the first time in five-months.  This is healthy and constructive as long as we continue holding.  The if stock is still finding support, it will hold the 50dma.  A dip so soon after reclaiming this level is a warning flag that it is struggling to find new buyers.

Stay safe