We have a very peculiar period here, very similar to what we saw in June/July 2012, during the last iteration of the Euro crisis. I remember writing a very similar post in that time frame describing a market that was down some 13 of 17 sessions (something like that) but up overall as the few up days were so significant (and largely due to overnight gap ups) they overwhelmed the many down days. We are now in the same situation – just an interesting thing to note. The S&P 500 has been down 8 of the past 11 sessions but is up over those 11 sessions as two of the three up days were massive moves.
As for market behavior here, since the gap up on the first day of the year the market has been marking time with a modest pullback the past four sessions. The gap has not been filled and that is the obvious near term question – does that happen now or later? Even a quick gap fill here would be ok as long as this index remains in the ascending channel it's back in, after a detour in late December. For now the S&P 500 has pulled back to the middle of the ascending channel.
Small caps continue to be an area of leadership, bursting over their September highs and thus far holding, unlike NASDAQ and S&P 500. After rising completely outside of its upper bollinger band for 2 days, this index has been marking time since, going sideways.
News flow has been quiet this week – Europe reported historical unemployment rates, and Germany a drop in exports earlier this week but no one really seems to care right now. The fiscal cliff issue has been put to the side as in the current era that is now a "long run" issue (a month from now), and earnings will dominate.
Any securities mentioned on this page are not held by the author in his personal portfolio.