Traders Threaten a Tantrum

Traders are often like spoiled children. They frequently demand more accommodation from the Central Banks with the threat that they will throw a tantrum if they don't get what they want.

On Thursday we saw a mini version of that tantrum when the ECB announced that they would leave rates unchanged. With that stocks sold off. However as the loss grew larger, the more the bluff was apparent as stocks got bid back up nearer to breakeven.

The consolidation under 2200 is now just over a month long. We have seen sector rotation after sector rotation which gives the appearance of action...all the while the overall market is stuck in neutral.

I do not believe we need a new catalyst to break higher. All it may take is the lack of new negative catalysts. With little to nothing to worry about, then stocks will continue to look like the superior alternative to just about all other investments. And Zacks #1 Ranked stocks will be the superior stocks because of their improving earnings prospects.

Best,

Steve Reitmeister

Executive Vice President, Zacks Investment Research

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