Gold Miners Rebound, Small-Caps Lag

 | Feb 28, 2017 | 11:29 AM EST
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The pattern for weeks now has been that the market hits an intraday low in the first hour or so of trading. There may be another lull during the day but we have a string of finishes near the highs. The same pattern is developing once again this morning.

Dan Rosenblum of sums up a number of the market extremes we are seeing. We have had 95 days without a 1% decline, which is the longest streak since 1995-1996. There have been 13 straight up afternoons and there are 40 straight days without a close near the lows of the day.

Despite the consistent intraday pattern in the indices there is some rotation taking place under the surface. Small-caps led yesterday but they are lagging today. That is evident in breadth, which is running 2-to-1 negative.

Another shift today is in gold miners. Yesterday the sector was slaughtered, although gold and silver didn't move much. It looked like there was either some rebalancing in the gold mining ETFs or a major fund move of some sort. Market Vectors Junior Gold Miners ETF   (GDXJ)   was down 9.5% yesterday but is bouncing back about 3.7% so far today.

My Stock of the Week, Silver Standard Resource  (SSRI) , was caught in the sector meltdown but is bouncing back today. Nothing has changed there and I'm inclined to build that position depending on moves in interest rates and the dollar.

Strong Chicago PMI and consumer confidence numbers are not having any impact on the market today and bonds don't seem to care, either. Chances of a March rate hike increased yesterday, but the market doesn't seem to care too much about it at this time.

Back in January many bears anticipated there would be a "sell the inauguration" trade, but it never developed. Maybe it was just too obvious. The market is even more extended now and doubts about how easy it will be to put Trump policy in place are growing. However, we still have to wonder if the "sell the Trump speech" trade is still too obvious to work very well.

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