The action the past week is perfectly representative of what all of 2015 has been like for stock investors.
Thursday 5/22 = Rise to new all-time highs
Tuesday 5/26 = -1% drop as investors take profits
Wednesday 5/27 = +1% bounce back up towards the highs
In fact this is becoming the narrowest trading range in recent memory fighting over just 2% the past few weeks. Unfortunately there is no clear end in sight to this range bound activity.
That gets us back to the need for a new catalyst to breakout from the trading range. The question is whether that will be a positive or negative catalyst???
Because we are in a bull market til proven otherwise, then best to place the highest odds on a positive catalyst emerging with new highs as the result. But do not completely short change the possibility that things get worse with more downside as the result.
Solution: Stay long, but stay nimble.
aka Steve Reitmeister
Executive Vice President, Zacks Investment Research