The Setup Is Good for a Bounce, but it Hasn't Happened Yet

 | Mar 10, 2017 | 12:19 PM EST
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An oversold market combined with a better-than-expected jobs report was a good setup for this market to bounce, but so far it has been a poor attempt by the bulls. The indices are slightly positive and we have the best breadth we have seen in a while, with about 4,100 gainers to 2,400 decliners. The level of new highs has also expanded to over 200, but there is very limited speculative action -- and that is the real problem.

Quite often, bounces in this market start slowly and gain traction when there are signs of support. But this is sluggish -- and is probably due in part to the fact that small-caps have been lagging for a while now, and there is quite a bit of technical damage. The bigger-cap names, like Facebook (FB) , Apple (AAPL) and Amazon (AMZN) , have been covering up the underlying weakness, and it is that inconsistency that is making the action quite challenging.

There is some decent action in biotechnology again, but this market has been lacking themes and leadership recently, which makes stock picking much more difficult. It simply is not a market that is conducive to building bigger positions. Some of the small "junk" is good for a trade, but more-aggressive position trades are not developing right now.

I am messing around with a few small trades in biotechnology names like Fate Therapeutics (FATE) and Zafgen (ZFGN)  , but it is an awfully dull market right now.

The inability of the market to put together a better oversold bounce is worrisome, but, as we saw yesterday, those late-day rallies can change the complexion of the action quite quickly.

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