Posted | by David Moenning |
None The Worse For Wear image

Stocks have been stuck in a sideways trading range for 12 consecutive days now. What is noteworthy here is that stocks have not finished with a single move of more than +/-0.5% during this time, which is the longest such streak since 1995. History shows that this type of consolidation phase tends to be bullish for stocks in the upcoming 6- and 12-month period of time. However, from a shorter-term perspective (1- and 3-month periods), stocks have tended to perform a bit under their historical norms.

To be clear though, the historical norms for the shorter-term periods are positive. Thus, the takeaway from the current consolidation is that stocks are consolidating the move up and may continue to do so for awhile. But in the longer-run, the move to new highs, which was accompanied by a plethora of breadth thrust signals, has been bullish for the market.

This morning, it looks like the "sloppy" action continues as traders fret about oil trading under $40, the state of Europe's banks, earnings, and the recent sub-par economic data. However, so far at least, the dips have been bought and the major indices are none the worse for wear.

S&P 500 - Daily

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P.S. I'm traveling this week with several early meetings, so reports will likely be short and/or sporadic.

Current Market Drivers

We strive to identify the driving forces behind the market action on a daily basis. The thinking is that if we can both identify and understand why stocks are doing what they are doing on a short-term basis; we are not likely to be surprised/blind-sided by a big move. Listed below are what we believe to be the driving forces of the current market (Listed in order of importance).

      1. The State of Global Central Bank Policies
      2. The State of the Earnings Season
      3. The State of Oil Prices
      4. The State of U.S. Economic Growth

Thought For The Day:

"People of accomplishment rarely sat back and let things happen to them. They went out and happened to things" -Leonardo Da Vinci

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Here's wishing you green screens and all the best for a great day,

David D. Moenning
Founder: Heritage Capital Research
Chief Investment Officer: Sowell Management Services

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Disclosures

The opinions and forecasts expressed herein are those of Mr. David Moenning and may not actually come to pass. Mr. Moenning's opinions and viewpoints regarding the future of the markets should not be construed as recommendations. The analysis and information in this report is for informational purposes only. No part of the material presented in this report is intended as an investment recommendation or investment advice. Neither the information nor any opinion expressed constitutes a solicitation to purchase or sell securities or any investment program.

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The analysis provided is based on both technical and fundamental research and is provided "as is" without warranty of any kind, either expressed or implied. Although the information contained is derived from sources which are believed to be reliable, they cannot be guaranteed.

David D. Moenning is an investment adviser representative of Sowell Management Services, a registered investment advisor. For a complete description of investment risks, fees and services, review the firm brochure (ADV Part 2) which is available by contacting Sowell. Sowell is not registered as a broker-dealer.

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