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The S&P 500 added a tenth of a percent on Wednesday, ending a two-session skid as the index continues testing 5,200 support.
The index opened Wednesday’s session with modest losses, but within minutes, supply dried up, and dip buyers rushed in, shoving the index into the green. It remained there for most of the session, but a bout of momentary second-guessing knocked it into the red in the final hour of the day. But that momentary selling was the best bears could do, and the index bounced into the green in the final minutes of the session.
While not overly bullish, Wednesday’s session was constructive and shows most owners are comfortable at these prices and are not rushing for the exits. If prices were overbought and vulnerable to a collapse, it would have happened by now. Yet, every time the market slips into the red, supply dries up, and prices bounce. That’s not how a weak market behaves.
Without a doubt, this market is not in a hurry to go anywhere, but anyone betting on a collapse is going to be disappointed. There have been countless excuses and opportunities for stocks to tumble, yet every time, stock owners shrug and keep holding. This situation can’t last forever, but it will take something new and unexpected to convince these confident owners to sell. As we’ve seen over the last couple of sessions, undercutting 5,200 isn’t going to do it.
Stocks can fall at any time for any reason, but right now, they are not interested in falling for no reason at all. Until something forces bulls to reconsider their outlook, expect all of these dips to continue bouncing within days, if not hours.
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Jani Ziedins (pronounced Ya-nee) is a full-time investor and financial analyst that has successfully traded stocks and options for nearly three decades. He has an undergraduate engineering degree from the Colorado School of Mines and two graduate business degrees from the University of Colorado Denver. His prior professional experience includes engineering at Fortune 500 companies, small business consulting, and managing investment real estate. He is now fortunate enough to trade full-time from home, affording him the luxury of spending extra time with his wife and two children.
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