The SPY is Just in a Range
- Posted by Greg Harmon
- on February 8th, 2013
What is with all the crazy extremism. The markets are not crashing and they are not going to the moon either. Yet analysts, media people, newpapers and bloggers are all picking an extreme view and espousing it. Big names that you respect like Ron Baron are calling for a 30,000 on the Dow Jones Industrial Average in 10 years. Dougie Kass and his ‘Summer of 1987 Feeling’ sees it heading the other way. There are of course many others with extreme views on both shorter and longer timeframes. The one thing that I do not see though is a group of people that are just chilling. Waiting for something to happen but recognizing what has been happening the last 3 weeks. Absolutely nothing. The simple chart of the S&P 500 SPDRs, $SPY, shows that since it has
breached the 149 level January 22nd, it has done nothing but move sideways. There has been all this extremism about a top being in or new highs coming and the SPY has stayed in a 2 point range the entire two weeks since. That is less than a 1.5% band. Is it really all that surprising that the SPY is consolidating/resting/moving sideways at a level of 150, a nice big fat round number. That the Dow is doing it at 14,000, or the Russell 2000 iShares, $IWM at 90? How long will this go on? Until one side or the other gets tired of shouting about doom or prosperity is my guess. And my personal view is that it resolves to the upside (sorry for not using all capitals or bold). You can deal with this by going on a ski vacation or a trip to the Caribbean until that time comes. Or you can adjust your timeframe and be patient, or like us, use essentially forward trades, via call calendars in the options market. Whatever your choice, just stop yelling and recognize that all that is happening is a sideways slog. Until it changes.
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Gregory W. Harmon CMT, CFA, has traded in the Securities markets since 1986. He has held senior positions including Head of Global Trading, Head of Product Development, Head of Strategy and Director of Equity. (More)
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