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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 quant - he's obsessed with building and perfecting mathematical models that allow him to predict, with startling accuracy, the direction of the markets, entire sectors, and individual securities. For the last year, he's been researching and building a new system that lets him move swiftly in and out of the hottest stocks in the market for life-changing gains - entirely on his own terms. The results of his newly-minted Night Trader system are nothing short of amazing.
Chris also contributes to Money Morning as the Quant Analysis Specialist.