It's a good start to the week but it feels like folks stayed up too late last night watching the Academy Awards. It is slow going and small-caps are lagging badly. Breadth is still solid at about 3000 gainers to 2200 decliners but its slipping as the S&P 500 takes out the opening lows.
Overall, it feels like the buyers are afraid of missing out but don't have a high level of conviction. Many folks had a hard time keeping up with the market when it ran up to start the year so there is performance anxiety, which causes chases on a strong open. It's when the bulls are caught in a quick reverse, however, that we start seeing more selling pressure.
My game plan is to continue watching for a topping process to develop but not be so bearish that I miss good trades. I did a little flipping into the open but there are a number of interesting long setups on my screen, such as Goldfield (GV), which is my Stock of the Week, and Biolase (BIOL), which posted strong guidance recently. With the reverse we are seeing now, however, my caution level is rising fast and I'm cutting positions.