I can't recall a period in the past few years when the market has traded in such a tiny band for so long. Perhaps there has been a similar string, but off the top of the head – can't recall when. This is now day 9, and in the previous 8 sessions the S&P 500 has traded within a <1.5% band in total. And if you exclude a week ago Monday the band is even tighter.
The previous 7 days have seen the following closes:
A "Groundhog Day" situation indeed. The S&P 500 continues to travel along the top end of its multi month range with no pullback, and volume squeezed out of the market. (volatility as well) U.S. bonds are finally selling off sharply (a bullish sign) but are quickly reaching oversold status.
Yesterday was also the first day transports as a group woke up, which is also something that has been missing.
Hence the overall conditions are turning more constructive with a lot of the secondary indicators finally falling in place. Of course, once market players get complacent that usually leads to a shake out, so it will be interesting to observe how the market deals with the coming 'oversold' condition that is facing bonds. Most of the past few years when bonds bounced (even on an oversold basis), risk markets crumpled. But if that does not happen, markets could be facing a scenario similar to Jan-March 2012 where the equity market did not let those looking to "buy the dip" in at all.
Any securities mentioned on this page are not held by the author in his personal portfolio. Securities mentioned may or may not be held by the author in the mutual fund he manages, the Paladin Long Short Fund (PALFX). For a list of the aforementioned fund's holdings at the end of the prior quarter, visit the Paladin Funds website at http://www.paladinfunds.com/holdings/blog