Think the Market Action Is Dull Now? Just Wait for the Storm

Stocks gapped up to start the day, and breadth is running very strong at around 4 to 1 positive, but it is exceptionally dull action. Volume is light, and there is little sustained momentum. Stocks have been changing direction daily, making stock picking difficult.

The problem is that the economic situation lacks clarity. In recent weeks there has been a shift from interest rates going higher for longer than expected to the potential of a series of rate cuts due to the banking crisis. We still don't know to what degree the Fed will be forced to battle inflation, and there is more talk about a potential recession, but the market hasn't fully embraced it.

Eventually, we will have some data or macro-news that will clarify the economic situation, and there will be much more aggressive movement in the market. Still, there is no way to time that with any precision. The inflation data on Friday is likely to cause some movement, but until we have a better feel for what the Fed will do, it will be hard for the market to discount what lies ahead.

There is always a temptation to try to force some buys in this sort of environment, but there isn't much strategic value to doing that. I have a list of names I would love to buy, but it is not worth it when the market is this thin and random.

This is the nature of the market at times, and rather than fight it, the smart move is to embrace it. Dull action may not be much fun, but it is the setup for some drama soon.

The S&P 500 was slowly sinking into the opening gap, and breadth is slipping a little as well.

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