Chart Talk {01.05.16}

Chart of the S&P 500 ETF {SPY}.  Chart courtesy of FINVIZ.com.  New year but same old trading range for the S&P 500.  We use this as a proxy for the market but you should know that many stocks in this index did much worse than it did in 2015.  In any event when we look at the overall market we continue to see a investors struggling with the push/pull of good underlying economic activity but also grappling with valuations at the higher end of the historic range that makes stocks attractive.  You also have to couple this with an environment now where interest rates are increasing, albeit at a very modest rate and from levels that are historically very low.

It is interesting to us that on days like yesterday market commentators increasingly talk about a correction.  Yet we've now gone 14 months with the market stuck in this same trading range and after yesterday's shellacking stocks trade at the same levels we saw in the last week of August, 2014.  That looks to us like we've been correcting now for a long time.  Instead of a correction of price, we've been seeing a correction of time.....And only time will tell us how this will be resolved.  Maybe we're seeing a market that will power higher this year with a rebound in oil and a better environment for US companies overseas or maybe we're in a market that is rolling over or maybe a market that's just going to trade sideways for a very long period of time.  That would likely be the pain trade, the trade that frustrates both the bulls and the bears.  We'll just let our indicators be our guide.

*Long ETFs related to the S&P 500 in client and personal accounts although positions can change at any time without notice to our readers.

Back Thursday.