(By Rich Bieglmeier) Stocks tried to wiggle their way higher to start the week, but the 50-day moving averages are a tough hurdle to overcome, especially on the first attempt. Monday was about as uneventful of a day as iStock can remember since the summer time trading blues.
Volume for the NASDAQ, Dow, and S&P were slightly ahead of Wall Street's totals on the Wednesday before Thanksgiving. Volume is a measure of how committed investors are to the current direction. With each passing day, bulls seem to be unsure about their next step.
Investors need to ask themselves, why did high frequency trading programs go into hibernation mode to start the week? The answer is most likely because they are waiting for the Federal Reserve's Wednesday announcement. Just remember, since the Fed started making these meeting public, stocks tend to rise in the 24 hour leading up to the announcement; in this case, from 2 pm Tuesday through 2 pm Wednesday. So, if you are going to make short-term trades, the calmest weather could start a little later today.
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We'd expect traders to remain in a holding pattern until the FOMC news is out. There is nothing on the economic calendar today that should upset or excite bulls or bears. With the indexes tightly positioned to their 50-day marks and uncertainty over the fiscal cliff and Fed's next move, it's possible the markets stay in a tight range today.
Longer-term, our sector performance review shows a multitude of new sectors jumping into one of our bullish camps. Sixteen industries are showing signs of outperformance for the weeks ahead. That stands against nine industries that could underperform in the days and weeks to come.
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Small and mid-cap stocks stand out in our review and are pulling to the front of the line. We can't say for sure this is the case, but the last leg of a bull's run is usually headed by smaller stocks. This rally has been moving forward since 2009, and the last leg has to come sooner or later.
On the bearish side of the scale, telecom stocks remain underwater. Investors looking for entry points into the sector might consider waiting for better prices. At the very minimum, the industry charts indicate telecom stocks will fare worse than the S&P and most other sectors.
For the full report, come back later today.