Boring = Breakout?

Sometimes, boring is good. A little less drama can bring us a welcome moment of peace and we haven’t had much peace since the stock market collapse exploded out of nowhere back in late September. This past week, we got a little peace. In fact, this week’s 51-handle run from low to high marked the tightest weekly range for the Russell 2000 (NYSE:IWM) since the collapse was ignited. Of course, boring doesn’t necessarily mean harmless. Tight ranges have an unnerving way of coiling the market into a violent breakout move.

So, maybe this was just the calm before we endure the next storm. Maybe just the fact that we did something different that pre-dated the collapse isn’t such a bad thing. Of course, if you were on the outside of the market looking in, you might never guess that this was a tame week for small caps. After all, the news swings certainly weren’t for the faint of heart. The U.S. auto industry appeared to be on life support and the Senate was willing to pull the plug, only to have the White House rush in to the rescue. We saw more people filing for unemployment benefits than we’ve seen in 26 years. And the number of people who remain out of work and are forced to file for continuing unemployment insurance is at a level not seen since 1974. Wall St. was faced with perhaps the biggest investor scandal of all time, and don’t even get me started on the numbing 4-week bill auction that generated a yield of 0.000%.

And, believe it or not, retail sales for the month of November declined for a fifth consecutive month, something that hasn’t been seen in at least 16 years. In a normal news cycle, the retail sales report alone would have been the stuff of endless hand-wringing and fretful debate...it barely raised eyebrows this time around. And this was a “tame” week for the market.

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