Climate Check July 26

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  • on July 26th, 2011

Absolutely nothing clear in the evidence.  No bull or bear leanings.  No divergences.  So what?!  We’ve been in a big ‘ol $SPX range for 6 months, a period filled with all kinds of foggy outcomes.  I’m going to do exactly as I’ve done as long as I can remember…study the action and look for an edge.  Today’s snapshot breaks down as follows:

As it has been for days, the evidence is mostly a mess in the middle…meaning the market is in a state of balanced supply and demand.  It will shift, even if only for a few days.  The idea is not to predict the change, but to be confident enough to embrace it and disciplined enough to milk it.  The foggy climate has not stopped stocks like $NFLX, $BRCM, $MMM, $X, $UPS, etc. from making huge moves on a quiet day.  These stocks attract even more attention when the indices range…if I can’t exploit a setup, it’s my fault and not the market’s.  $AMZN, $JNPR, $LVS, & $PNRA are just a few of the stocks we can expect to attract attention tomorrow regardless of the goings-on in DC.

I have no clue how this will play out.  In my career, the sample size for this political outcome is about to be 1…not enough to build a case for heavy exposure but at least we’ve had ample time to cushion the blow of this neon swan.  To a news watcher, we could label this a “scare you out” market.  To a trader, the only fear should be getting lazy in a “wear you out” market.  Someday soon, this will be in the rear-view mirror and the next phase of uncertainty will arrive.  Stocks will fluctuate then, too, and we’ll need to dig just as hard for the ones that match our style…might as well get used to it.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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