Start the conversation
Why are stocks moving sideways?
It's the uncertainty… I'm sure of it.
There's been a switch in the leadership of the market over the last month. That is to say, different kinds of stocks are driving it higher or lower.
Small-cap, housing, and semiconductor stocks reigned supreme in February as they moved higher. But now, the market is being led by utilities, consumer staples, and real estate.
Did you catch that leadership list? Do you know what they have in common?
They are all defensive sectors – places investors go to hide it all away during (or before) a market correction.
The confident up and down moves the major indexes had been making are now turning into a rather wimpy game of tug-of-war. We saw an advance in the S&P 500 all the way up to 2,850… only to see a quick reversal as traders shot into the market to take profits.
That's a timid move that's put us in another technical battle with 2,800. Not great.
Another contributor to the lack of direction? No catalysts.
Think about it: A month ago we were still riding a wave of earnings results that helped pull additional monies into stocks. Daily "trade war" headlines provided a constant stream of fuel for the markets' fire, sending it higher and lower.
In short, there was a lot more to look at if you were trading.
So, is this a market that you walk away from?
About the Author
Chris Johnson is a highly regarded equity and options analyst who has spent much of his nearly 30-year market career designing and interpreting complex models to help investment firms transform millions of data points into impressive gains for clients.
At heart Chris is a quant - like the "rocket scientists" of investing - with a specialty in applying advanced mathematics like stochastic calculus, linear algebra, differential equations, and statistics to Wall Street's data-rich environment.
He began building his proprietary models in 1998, analyzing about 2,000 records per day. Today, that database, which Chris designed and coded from scratch, analyzes a staggering 700,000 records per day. It's the secret behind his track record.
Chris holds degrees in finance, statistics, and accounting. He worked as a licensed broker for 11 years before taking on the role of Director of Quantitative Analysis at a big-name equity and options research firm for eight years. He recently served as Director of Research of a Cleveland-based investment firm responsible for hundreds of millions in AUM. He is also the Founder/CIO of ETF Advisory Research Partners since 2007, noted for its groundbreaking work in Behavioral Valuation systems. Their research is widely read by leaders in the RIA business.
Chris is ranked in the top 99.3% of financial bloggers and top 98.6% of overall experts by TipRanks, the track record registry of financial analysts dating back to January 2009.
He is a frequent commentator on financial markets for CNBC, Fox, Bloomberg TV, and CBS Radio and has been featured in Barron's, USA Today, Newsweek, and The Wall Street Journal, and numerous books.
Today, Chris is the editor of Night Trader and Strikepoint Trader and contributes to Money Morning as the Quant Analysis Specialist.