Stocks In State of Suspended Animation
If you look at the chart of the market for the last several days you can see the extreme narrow movements. Today looks to be the 5th day of that pattern, so far. Of course, now that participants are becoming comfortable with this action, it would not surprise me to see the market take a little more of a hit tomorrow. That just seems to be the way these things go.
Market moving news is again sparse today, and I expect trading volumes to again be anemic. We did get a pending home sales report, which showed an increase of 3.5% for November. But that has done little to boost the market, which is hovering near the flat line on the day.
The dollar is lower again, but it is failing to boost commodities this time. Oil prices are down 1% to $90.15, and gold prices are 0.5% lower near $1406.
Asian markets were mixed overnight; the 10-year yield is higher to 3.40%; and the volatility index is +2.5% higher to 17.71.
Trading comment: I have been commenting for weeks how investor sentiment has become too complacent, and that makes a correction more likely. Lately, I have seen more and more people trotted out on CNBC calling for the same correction in January. We know that when everyone is looking for the same event in the market, it rarely happens. So that makes me a little less confident in my call, only become it is becoming a little crowded.
I still think a correction is coming, but maybe the timing of it will keep people off balance. It could be that the markets rally in the beginning of January, just to suck in more late-to-the-party bulls, and then we get the correction once everyone is off balance. This may sound like a convoluted thesis, but it's very common. Let's see how the beginning of January plays out, and I will update my thesis in real time.
long VIX calls