Market Has No Catalyst – Watch For Sector Rotation As Q2 Ends

Posted 9:00 AM ET - Welcome to the summer doldrums. The market is treading water near the all-time high and there isn't any news to spark a breakout. The 4th of July falls in the middle of the week and it will disrupt the action. Most traders will take Monday off and many might take the week off. Trading volume will hit the low of the year. Janet Yellen will speak in England this week and GDP will be released. These events won't produce much of a reaction. Energy stocks are catching a small bid this morning, but oil inventories remain high. Any move is simply a short covering bounce. This will provide a good back drop for today. Technology stocks are rebounding and there are some opportunities in this sector (biotech has been hot). If you are a swing trader you should have a nice portfolio of bullish put spreads on. I've been promoting this strategy for two weeks and your spreads should be in nice shape. Option premiums are melting away like ice cubes and these positions should be generating nice income in a dull market. Day traders need to wait for the first move of the day. If it looks strong, wait to see if there is follow-through. When the market breaches the first hour range, stick with that direction. Once the momentum builds we see follow-through. We typically only get one of these days out of the trading week. The other four days the market remains in a tight range after the initial move. That means you have to set passive targets and when the momentum stalls, take profits. We've seen a pattern the last two days where the market grinds higher for the first few hours and then it stalls. When stocks can't advance any further we see a round of late day selling. I'm expecting a similar pattern today. Asset Managers are "window dressing" as Q2 winds down. Look for sector rotation and try to ride their coattails. Trim your size and reduce your activity in this low probability environment. . .

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