We're at the Crossroads of Common Sense and Greed

 | Feb 16, 2017 | 11:26 AM EST
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The recent market pattern has been a soft open, some pressure for an hour or so, a number of buy programs and then a strong finish. The buyers were not quite as fast to buy the dip this morning but they are showing some signs of life now.

Breadth is lagging, with about 2,650 gainers to 3,600 decliners but it is moving up quickly. New highs are around 650, which shows that there still is plenty of momentum out there.

The market is at a juncture where common sense suggests that it rest, but greed suggests that it could easily keep going. Many market players are still more fearful of missing out than they are of being caught in a turn.

As I discussed in my opening post I'm trying to avoid the temptation to call market turns. I want to focus on my individual stock positions and let them determine what I do. I've been cutting back into strength and most of what I have left isn't doing much right now.

The only group right now that looks interesting is gold miners. The VanEck Vectors Gold Miners ETF (GDX) has been consolidating for the last eight days and is now pushing back toward the top of the range. It is likely to move inversely to the indices but there isn't a complete correlation. A couple small miners I've been following are McEwen Mining (MUX) and Gold Resource (GORO) . There are quite a few similar charts in the group.

The bounce in the indices fizzled as I write and I'm hearing that there may have been a major blow-up by a short that was forced to cover. With that finished the buying push, has relented.

I'm rooting for some downside as we need resets to make for more interesting trading. On the other hand, I don't expect the dip buyers to be very patient. We are hitting day lows as I write. It sure is a relief to finally see a little normal downside volatility.

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