Consider the last three days of trading in the S&P 500. On Tuesday, SPX gained $25, but turned around and gave back $20 yesterday. Today, SPX closed at $2064, effectively unchanged (more precisely, down thirty five cents). RUT lost $6 to close at $1109. Volatility decreased a bit with the VIX closing at 14.4%. Trading volume was slightly up with 2.3 billion shares of the S&P 500 trading. Trading volume was only up 1% on th NYSE and was up 4% on NASDAQ.
SPX traded down to touch its 50 dma at $2054, but then executed a textbook bounce off support to close unchanged on the day. RUT broke its 50 dma during today's trading, but recovered to close precisely at the 50 dma of $1109. So we continue to watch a market that seems to be trapped in a sideways consolidation pattern. Perhaps traders will be treading water until after the presidential election? This scenario also conforms with historical patterns of lackluster trading through the summer (the "sell in May and go away" pattern). The Stock Traders Almanac has documented the historical strength of being long the market from November through April. $10,000 invested during those months would have grown to $838,486 for the past 65 years as compared to a $221 loss for May through October. This November, we will have the additional factor of a possible dramatic change in the White House. I can't predict who will be elected, much less how the market will react, but I think we have many forces that are uniting for a sideways market leading to November.
Initial unemployment claims rose this week to 294 thousand from last week's 274 thousand. Continuing unemployment claims also rose by 37 thousand to 2.161 million. That is the third week in succession of rising weekly claims; that may not be statistically significant yet, but I still find it concerning.