Precious Metals, Mining Lifting Markets

 | Jan 24, 2017 | 10:45 AM EST
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The indices continue to be stuck in a trading range. There is tenacious underlying support but the inability to generate sustained upside momentum. The market has not had a pullback of 1% in months and is only slightly off its all-time highs but can't manage to break out.

We went through a similar trading range from July to October last year, but this one is even more puzzling since there have been so many potential catalysts recently. Traders have been anticipating that the uncertainty of a Trump taking office would create increased volatility, but so far they are wrong. It is an odd dynamic and we may need some downside to destroy the complacency before we will see some good upside.

The action today is under the surface again but this time breadth is the reverse of yesterday and is running close to 2-to-1 positive. The FANG names, which led yesterday are mixed, but Alibaba (BABA) stepped up and is attracting some momentum money. I like the numbers, valuation and chart of BABA and have taken a small initial position. I want to see a higher level base form and plan on slowing adding if it sets up the right way.

The best action today is in precious metals and mining for the second day. My Stock of the Week, Teck Resources (TECK) is acting well and we have other things like Hudbay Miners (HBM) and Northern Dynasty (NAK) hitting highs. Uranium is running again, and I'm playing that sector with Uranium Energy (UEC) and Uranium Resources (URRE) .

I discussed the optical sector in my weekend post and it is perking up nicely today. I am playing AXT  (AXTI) and Oclaro (OCLR) aggressively in that sector and am looking at some of the others for trades.

Big-cap technology like Western Digital (WDC) is acting well and the overall tone of trading is good. The indices hide the underlying weakness yesterday but today they are covering up the underlying strength.

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