On the surface, nothing much happened in U.S. stocks today. The Standard & Poor’s 500 stock index closed up 0.33% for the day.
Ho hum.
But intraday the S&P 500 showed an entirely different story.
After opening at 2617–up from Friday’s close at 2604, stocks headed straight up hill, hitting 2653 at 1:57 p.m. New York time.
That, however, was the high of the day. The market then retreated and retreated some more until it closed at 2613.
The action kept the market trapped in its recent, relatively narrow range with a top near 2682 and a low near 2575. Â The key level today was 2626 since that was the location of several moves up from, bounces off, and retreats to.
Ranges do eventually get resolved to either the upside or the downside–and it’s a negative for the direction of this current resolution that the market couldn’t close today in the neighborhood of its 2653 high but instead pulled back to 2613 just below its opening at 2617.
That’s an indication that the moment it doesn’t take very much of a move to the upside–just to 2653–before traders decide that the market is too expensive and that it’s time to take profits for the day.
That lack of upside enthusiasm could get fixed by the spectacular earnings season that is on tap beginning, really, next week. But those earnings estimates have been out there for a while and it’s equally conceivable to me that we will see a sell on the news reaction to the reports.
The danger here is that if we break through the bottom of the current range at 2575 on the S&P 500, the next solid base for this market is at the June through September 2017 levels at 2440. That’s not a huge drop from today’s 2613, but it is another move downward for a market that is increasingly nervous about a longer move lower.
I’m looking to see how traders and investors reaction to earnings before placing anymore directional bets in this market. But stocks are definitely more nervous than today’s final levels indicate.
