Anyone watching the market today was more than likely bored to tears.  Today we witnessed a light volume trading session with very little in the way of excitement.  You do get these types of days every now and again, but the key is not to force trades.  A theme of this market continued today with another weak close.  Sellers continue to pile in at the closes for one reason or another.  Certainly, in a bull market you would want buyers racing in and accumulating shares at the close.  However, as today shows this has not been the case.  There was not much else to take from this market today other than we were able to add to gains with volume coming in light.

Financials and Utilities were big winners on the day.  XLF actually appeared to break free from its current consolidation area, but volume was well below average.  Although it was above Friday’s level it certainly wasn’t overwhelming enough to make you think this could be something special.  XLU continues to trade within its range despite having volume perk above its 50 day volume average.  Are financials ready to spark this market higher?  Time will tell, but at least we did have a group break free from some resistance.

Recent leading sector XLB finished lower on the session, but the group has been pushing higher as of late.  A breather here is not out of the question. XLE was another group lower on the session, but it too has been pushing off its recent lows.  Again, today we did not see much excitement coming off the weekend.

There is quite a bit of chatter over an approaching correction.  CNBC appears to be rallying the troops for those who are calling for a correction.  We know at some point all markets undergo corrections and they are quite normal to the process.  And yes, we have a high level of distribution days at the moment.  Aside from all of this does not guarantee a correction.  Probabilities are mounting we are near some sort of correction where the market adjust to conditions as they arise.  At the moment the S&P 500 trades at 18.55x trailing twelve months earnings.  One is not exactly buy value here.  We will say the earnings yield on the S&P 500 still far exceeds the 10 year treasury.  Makes you wonder where the natural interest rates would be if the Federal Reserve was not holding down interest rates.  The S&P 500 dividend yield has fallen below the 10 year treasury.  Dividend investors are in search of yield elsewhere.

All of this uncertainty and the question regarding are we heading towards a correction really strikes home an important topic:  Risk Management.  Without a risk management strategy you are opening yourself up to tremendous risk.  Open ended risk, the worse kind.  Know your position sizes, stops, and exits.  The difference between success and failure is directly linked with your risk management strategy.

Let’s see what this market has in store for us the rest of the week!