"Never Short a Boring Market"

Never short a boring market. June 18, 2014     "Never Short a Boring Market"   What happened to the 1%? Don't short your boredom away... Plus: 3Ds looked primed for another run   Greg Guenthner coming to you from Baltimore, MD... Greg Guenthner Never short a boring market. That's an old Wall Street adage you should learn. Don't ignore it--especially in this market. If you do, you'll pay for your mistake. More on this warning in just a minute... First, let's take a look at the boring old S&P. Sure, the S&P 500 has been relatively tame lately. Yesterday, for example, the big index wandered higher by just about 0.2%. Despite hanging around new highs for the better part of the past month, the S&P hasn't flaunted any big moves higher. However, the folks over at Bespoke Investment Group remind us that going weeks without a major thrust higher or lower hasn't always been the norm... "There was even a time during the Financial Crisis when the S&P 500's average daily move over a 50-trading day period was above 4%!" Bespoke reports. "These days, the S&P 500 doesn't even average a daily move up or down of half of one percent.  In fact, it has been two months (42 trading days) now since the S&P 500 last had a move up or down of 1% or more.  To put that in perspective, you have to go back nearly 20 years to 1995 to find a period where the S&P 500 went longer without a move of that magnitude." As you can see from the chart, we haven't had any big streaks of small S&P moves in decades... Since 1928, there have been 30 other streaks like this one that lasted longer than 40 trading days, according to Bespoke.   Just look at the 1950s and 60s (these were bull markets, by the way). Neither of them were very volatile at all. After everything you've endured since the dot-com crash, it's almost impossible to imagine flat market conditions investors enjoyed 50 years ago... "The years 1963, 1964, and 1965 each saw streaks of more than 100 trading days without a 1% move," Bespoke continues. "If you think the last two months have been calm, imagine going through a period of more than eight months without a 1% move." But like I said earlier, "boring" isn't an excuse to bet against the market. That's the big mistake so many traders make. They assume the S&P is running out of gas, so they begin to bet on lower prices and the return of volatility. Then you get days like yesterday. Despite mundane action in the S&P, short squeezes are starting to pop up all over the place. Solar stocks, beaten-down tech, and even 3D printers are starting to show signs of life under the surface. Some are even posting impressive one-day gains. Keep reading for an update on the 3D printing breakout below...         100 Brave Wildcatters Wanted! If you haven't doubled your money in 2014 yet, please listen closely. We're looking for a 100 brave wildcatters a day to embark on our next potential "money doubler." This isn't a gimmick. Earlier this year, a small group of readers had the chance to more than double their money in 36 days. Click here for the full story.           Rude Numbers Targets, Predictions and Wild Guesses   $8.2 trillion worth of underground oil in Russia will require U.S. technology for extraction, according to Bloomberg. Russia needs Western companies to provide modern drilling and production gear to develop its Arctic and shale reserves... 1 million homes went under construction in May. Housing starts were in line with economist forecasts after a nasty winter delayed groundbreakings... $19.76 buys an ounce of silver this morning. Silver futures have steadily climbed higher this month after hitting year-to-date lows in late May... $106.65 buys a barrel of crude today. Oil is hanging tough near its highs as Middle East tensions simmer... 1,933 is where you'll find S&P futures this morning. Stocks are looking to start the day exactly where they left off yesterday afternoon...     Rude Trends When to Buy... When to Sell   The market gave us another powerful momentum signal yesterday--one we just discussed Monday morning. 3D stocks are catching fire again... Here's a quick recap: Since early 2013, I've contended that 3D printing stocks have been "the tell". These stocks were among the first to shoot higher in January 2013 as the market began its big run. And 3D stocks were also the first popular momentum names to signal trouble ahead at the start of this year. They topped out in early January, while social media and other momentum shares don't peak until early March. Now, after weeks of base-building, these stocks look primed for another run. 3D Systems Corp (NYSE:DDD) has broken free of its downtrend with a 3% move higher yesterday. Not only is DDD a solid potential trade--it's also helping to reignite the momentum spark that's been absent this market since fast-moving stocks began to correct in late February. While we don't know if this kind of a move will lead to new highs in these beaten-down momentum names, we could still see plenty of short covering as we head toward the end of the week... [Ed. Note: Send your feedback here: rude@agorafinancial.com - and follow me on Twitter: @GregGuenthner]     Ignore At Your Own Peril Today's Must Read Links   Ex-corporate banker challenges anyone: "Try this experiment..." The Most Lethal Arm of the United States Government? [must see] Bigger than Benghazi, the IRS and the NSA Scandals... Combined?     BE SURE TO ADD dr@dailyreckoning.com to your address book.       Additional Articles & Commentary: Join the conversation! Follow us on social media:         The Rude Awakening is committed to protecting and respecting your privacy. We do not rent or share your email address. 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