A Time to be Patient with the Market

On Monday, the general market opened the slightly up and meandered sideways throughout the day in dull trading. After the first hour of trading, the high and low for the day were set, and price basically remained inside these early price points for the rest of the day. This is the type of day when the big money is not very active, so the market simply doesn't move much.

The Nasdaq closed up +6 points (+0.15%)%), the S&P gained +3 points (+0.18%), and the Dow rose just +5 points (+0.03%). Volume was below average for all three indices. Advancers beat decliners by a ratio of 2.5 to 1. The VIX closed slightly lower at 13.49. 

Eyes are watching to see if the Nasdaq can make a higher swing high this week. Today, the Nasdaq retested the 29 November pivot high but backed off. Both the S&P and Dow are still below their last pivot highs. Overall, it is not a positive sign to see weak gains and a day when the indices close in the lower 1/2 of the day's range. It suggests the bulls tried to push higher but were turned back by the bears.

On Tuesday, the 4,063 level on the Nasdaq is a key number to watch to the downside (today's low). If price closes below 4,603, then price will have formed a pivot high and a potential double top could form. 

The market is giving mixed signals, and that means the BIGs may be hiding their actions. It appears that there are numerous stocks that are doing well but are too extended from their moving averages to may good buys (risk wise). Other, quality stocks are retracing to their 50 EMAs or forming sideways range patterns where they seem to be stuck.

This is a time to be patient and hold back from entering new positions unless they have obvious strong triggers, and even then, enter with a reduced number of shares.