War is Hell But This Market is in Purgatory

When headlines hit Friday night of President Trump's decision for "bombs away," the initial thought by many was that the market was set-up to follow-through on Friday's weakness with a sizable gap lower. Instead, as is the norm in this rangebound market, we are gapping higher and not yet fading off the open.

In fact, as I write this I see that bulls are attempting to clear the pivotal 2,672 level on the S&P 500 Index, albeit with a declining 50-day simple moving average lurking just above. 

The reality is that this market continues to show far more signs of one being held in Purgatory rather than Hell, at least for now. We know that will change down the line. But timing a major bull market top is uniquely difficult--Actually far more of an arduous task than timing a bear market bottom, for example (not that that is an easy or profitable endeavor, either). 

Specifically, "Purgatory" would mean the indices are essentially rangebound with competing forces: Declining 50-day moving averages keeping a lid on the best-acting charts while a rising 200-day moving average on the indices keeps bears clearly in check. 

Our goal during these market periods is to first and foremost resist becoming frustrated for lack of swing trading action and to not force in trades simply for the thrill of seeking action. But, rather, we want to take selective bets as they appear and keep a focused and cogent list of the very best performers since if and when market pressures abate those names should outperform. 

Just this morning, for example, some of the optical-related names are getting decimated. ACIA LITE OCLR are just a few examples. 

But note how ZAYO is defying sector weakness, even if the name is on the periphery of the sector. It is still impressive to see it green, basing under well-defined $37 resistance in front of May 3rd earnings.