Tired Traders Sit on the Sidelines as the Market Refuses to Rest
The level of inaction is real. Plus, my view on all the talk about 'meme stocks' and two stocks I'm watching.
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Market action is mixed on Thursday as the S&P 500 hits another new all-time high, but breadth is running nearly two to one negative. Alphabet GOOGL has faded after a gap-up open on its earnings report, and Tesla TSLA is under heavy pressure following disappointing numbers.
There aren’t any significant earnings reports due until next week, and the market has already discounted positive trade and tariff news. While the news is mostly good, it isn’t good enough to attract aggressive buying.
While there has been quite a bit of talk lately about "meme stock" trading, it has been quite limited and been overblown. Most of these names didn’t run more than two or three days and then reversed hard. In my view, this was just a convenient story for those that wanted to frame the recent market action as frothy and excessive. From my perch, the recent pocket of momentum in smaller junk stocks was not at all unusual.
One phenomenon I have noticed recently is a high level of inaction by a lot of more-experienced traders. Trading volume has dropped, and many are sitting on the sidelines waiting for better market conditions. This has been an exhausting trading environment without a lot of great technical action for active traders. We will need a shift in the trend to shake things up and get many traders active again.
Indeed, I've been one of those traders who has been inactive lately. It isn’t because I’m bearish. It's because I am not seeing opportunities that allow me to be aggressive. There are still trades to be found, but I’m keeping the size small.
On Wednesday, I mentioned Uber UBER as a stock I wanted to add. It is bouncing 3.3% Thursday due to the struggles at Tesla. I continue to like the way this is developing into its earnings report. I also like the way the Xeris Biopharma XERS chart is developing here, but don’t expect it to do much until it is closer to earnings on August 7.
I’m not very excited about this market, but the upward trend continues, and it is a mistake to try to time a market top.
At the time of publication, Rev Shark was long UBER and XERS.
