Well I love a rainy night, I love a rainy night,
I love to hear the thunder
Watch the lightning
When it lights up the sky
You know it makes me feel good…
This classic by Eddie Rabbitt was today’s office tune ahead of the open as it best explains my mood but not necessarily Wall Street’s.
May expiration day has been bearish in recent years as the Dow has fallen 65% of the time over the past 25 years. Today’s action has been mixed following Thursday’s drubbing but has been mostly bearish inside of a tight trading range.
While the bears are on track to win the week it is still important to note that the indexes are still in a trading range, albeit near the middle and bottom of them.
With 1Q earnings season wrapping up, Wall Street will quickly focus on the rest of May along with economic and geopolitical news moving to the forefront. With a holiday weekend coming up next week, traders might decide to hit the exits early instead of worrying how May plays out.
It is too early to tell if the market has reached a fork in the road but chances are good the next few weeks could determine the next trend or a continued trading range into the summer.
While I have talked about a possible market top, it is also still too early to tell how the near-term plays out until the chart work this weekend is complete.
The extra homework has been necessary to navigate this difficult environment as most savvy veterans have thrown in the towel.
The current trades for the portfolio are mostly bearish so I like today’s action. However, because the market is still in a trading range it will be important to lock-in profits when the opportunities arise.
Heading into the final half of trading, the Dow is lower by 2 points to 16,444 while the S&P 500 is up a point to 1,871. The Nasdaq is off 5 points to 4,063 and the Russell 2000 is declining 3 points to 1,092.
I have 2 Profit Alerts ahead of the weekend on trades that are up 40% and 35%. I will be back on Sunday night with the Weekly Wrap and Monday morning with the Daily. Until then, have a great weekend everyone!