Bearish Arguments Make Early Headway

 | Jan 17, 2017 | 10:33 AM EST
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Stock quotes in this article:

bcei

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cwei

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sn

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mpet

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ccj

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uec

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jd

There are several explanations for the weak action this morning. Breadth isn't terrible with about 2,300 gainers to decliners but it is slipping. Meanwhile, the dip buyers aren't in any big hurry this morning, although I expect at least one good try this morning.

The headlines are blaming the Brexit news out of the U.K., Trump's comments about the dollar and general concerns that the recent uptrend is coming to an end. The bearish arguments are easy to make and it is creating some caution. Plus, the media folks are making sure to highlight plenty of worries and concerns about what Donald Trump might do.

Under the surface of the indices there are some pockets of momentum in oil names. Bonanza Creek Energy (BCEI) and Clayton Williams (CWEI) are driving the group with some deal news. And traders are looking for other potential plays on the strength, such as Sanchez Energy (SN) and Magellan Petroleum (MPET) .

Outside of oils there aren't any major positive themes. Biotechnology and drugs are being hit again after more Trump comments about drug pricing. The FANG names are struggling and there is some weakness in chips. Retail has a small bounce but it is not particularly convincing.

I have some interest in the uranium group and am patiently looking for entries in my "Stock of the Week," Cameco (CCJ) and also Uranium Energy (UEC) . The group is extended and may need a rest, but I'm looking for support to quickly occur.

China online retailer JD.com (JD) is on my radar as it moves out of base and above the $27 level. I'd like to see some volume to bring in momentum players.

A bounce is starting to develop as I write but stock-picking is difficult and I', watching positions very closely.

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