Market's Consolidating, Not Topping

There isn't much news flow out there Friday, and many market players are happy to head out early in front of Thanksgiving week. There was nothing new on the China trade front and with earnings season winding down, there isn't much news from individual stocks.

The morning started with some "don't short a dull market" action. There wasn't anything obviously positive, but stocks opened strongly as the inclination is to continue to look for long exposure when there isn't any negative catalyst at work.

The buyers were unable to generate sustained momentum, so they decided to take some gains instead and that pushed the S&P 500 into the red. Breadth is still good with around 4,100 gainers to 3,000 decliners, but there is minimal momentum. The lack of momentum is readily apparent in the number of new 12-month highs, which is a puny 106. The indexes are still close to highs, but there sure isn't much strong leadership that it is keeping it that way.

For a while now the theme of the market action has been minor upside progress with limited downside. The underlying support has been good even though the S&P 500 is now working on its fourth straight day of losses. If the selling were more aggressive, it would be worrisome but it has been mild and looks more like healthy consolidation rather than topping action.

I've had a hard time putting new capital to work, but this technical action should start producing better individual charts. I see no reason to forego trading discipline, even though my cash levels are quite high and I'm generally bullish.

Next week we have the Thanksgiving holiday, which will cause lighter volume, but it often has provided some good speculative trading. With the indexes meandering, and consolidating it may be a good setup for some holiday trading.

I continue to look for some new entry points, but don't expect to find much. It is a good day to catch up on some other business.

At the time of publication, DePorre had no position in the securities mentioned.