Action, like we are seeing on Wednesday morning, is a good reminder that sometimes the best market move is no move at all. While breadth is running positive and the indexes -- excluding the small caps -- have small gains, the action is extremely anemic.
My main measure of speculative market strength is to look at the number of stocks that are trading up more than 10%. When aggressive traders are confident, there will be dozens of stocks moving more than 10%. These are usually small stocks and lower-priced names, but it is a good indication of the level of optimism that exists.
Currently, only about eight stocks are up more than 10%, and the only one that is meaningful is Dlocal (DLO) , which is up about 50% and is trading at the highs of the day as I write. The other name of interest are H&R Block (HRB) which is up about 10.2%.
It isn't too surprising that the market action is so lackluster right now. We are in the dog days of summer, with vacations ending and school starting. Typically this is the lowest volume time of the year. It doesn't help that there are few earnings reports and no major economic news on the agenda.
The easiest mistake to make right now is to trade out of boredom. I see stocks that I would like to buy, but they really aren't set up very well right now. I can't let my desire to do something construction push me to take action when I really shouldn't.
Ironically, action like this, which is dull and dreary, makes me much more optimistic about the opportunities that will come. It is just a matter of staying patient and waiting for market conditions to continue. I'm quite sure that many stocks are going to see some nice rebounds, but I can't let my desire to stay busy push me to buy them before they are ready.
At this juncture, there is no reason to believe that the market has found support and is going to trend higher from here. The risk is to the downside, and there is no way to know how far things might drop. Maybe we will just see a lot of churning, but that still isn't a reason to put money to work.
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August 16, 2023 at 10:50PM
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On Days Like This, the Best Trade Might Just Be No Trade - RealMoney
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