Don't Short a Dull Market

It is extremely dull out there which may not be a bad thing. The bears haven't been able to build on yesterday's weakness and, while stocks are not flying back up, they are holding steady and there is solid outperformance by the Russell 2000 ETF (IWM) . Breadth has been inching higher all day and is now approach 3 to 1 positive.

The S&P 500 has been in an extremely narrow range for hours but it brings to mind the old saying, 'don't short a dull market'. Market players that are looking for action might think the downside is a good bet when its slow, but they often find themselves caught by surprise when the buying slowly starts to build again.

I've had some outside distractions and haven't found much new I want to buy. It is interesting to see strength in both small caps as well as the big cap momentum names that are found in the IBD 50 Fund ETF (FFTY) . Both groups tend to attract a higher level of speculation and the longer they hold up the more likely additional buying will ensue.

The S&P 500 is looking for an intraday high this afternoon which should trigger a little short covering. I'm looking for inventory but I'm finding this to be a bit tough for stock picking right now.

This Congressional hearing with the bank CEOs today is absolute farce. It is a good example of why so many politicians are treated with disdain. It is simply a mechanism for political showboating and will accomplish nothing now. Most of the questions are about things other than banking or the financial system. Maybe the ridiculousness of this hearing is helping to keep the market contained.

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