Editor's Note

The market has come to a fork in the road and cannot decide which direction to take. The indexes have moved sideways for 8 days with no indications of future direction. Any new position would simply be a coin toss for direction. With the payrolls on Friday and the French election on Sunday, there is no reason to add a play in a flat market just because it is a newsletter day. We should have reasonable confidence in a market direction before we invest. The market is not giving us that confidence until it goes directional again. We have moved into the "Sell in May and go away period." So far, that has not happened but it can take weeks to develop. We should be patient until there is a direction.

Despite heavy volume of 7.84 billion shares, the indexes still closed nearly flat. Without any material catalysts scheduled for next week this appears to be a distribution cycle. Funds are "distributing" their stock at a market top and patiently waiting for retail traders to push the prices up to their sell triggers. As long as traders continue to try and push higher this could continue for days or even weeks. Once traders get tired of banging their heads on resistance and pull their bids, the house of cards could come tumbling down.


No New Bullish Plays


No New Bearish Plays