Still Struggling to Put Money to Work

 | Jan 10, 2017 | 1:38 PM EST
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Weak action this morning turned into a little bear trap. The FANG names exhibited some early weakness, giving the bears hope that maybe the outperformance of the Nasdaq was coming to an end and would pressure the broader market. The Nasdaq is lagging the iShares Russell 2000 ETF (IWM) small-cap index, which is up 0.9% but it is beating the S&P 500 and DJIA once again. IWM is a holding of the Stocks Under $10 portfolio.

The big difference today is that breadth has improved quite a bit. We have 4,400 gainers to 2,150 decliners, and 267 stocks hitting new 12-month highs. Biotechnology reversed sharply into positive ground, but the FANG names are mostly in the red.

Strong guidance and a buy back from General Motors (GM) just hit, and that is helping the tone of the action. What is most impressive about the market is the pockets of momentum action. Some of it is real junk, like Professional Diversity Network (IPDN) and Enteromedics (ETRM) , but traders are feeling confident to push questionable names with thin floats. We saw that back in November when the bulk shippers, like Dryships (DRYS) , went nuts.

The main thing I hear traders saying today is "I need inventory." Many of them have cut inventory lately and are having a difficult time putting cash back to work. I am struggling myself to find some new merchandise, but will continue to dig.

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