We Need This Pullback for Better Trading

 | Apr 11, 2017 | 10:58 AM EDT
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Stock quotes in this article:

QQQ

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amzn

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tsla

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aapl

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auph

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pump

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twm

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IWM

We have some selling pressure in the early going with breadth really slightly negative. Small caps are showing very good relative strength compared to the senior indices which appears to be function of some sort of algorithm but the Nasdaq 100 (PowerShares QQQ ETF  (QQQ) ) and S&P 500 are now hitting intraday lows as I write.

Some pundits are attributing the pressure to a couple of tweets by President Trump about dealing with North Korea. That makes for an easy headline, but this market has not cared one bit about the news flow recently and the pressure is more likely a function of computer driven considerations. The market has refused to react to any major news recently and the Trump tweets this morning aren't very consequential. Many of the bears are anti-Trump, and are fast to assign blame for any market hiccup to him.

There is relative weakness in big-cap technology names, including Action Alerts PLUS holding Apple (AAPL) , Amazon (AMZN) and Tesla (TSLA) , but money is rotating into small-caps and holding them up a bit better. There still is not a lot of strong emotion out there, but we are seeing some lower lows for a change.

I've been rooting for some strong emotions in this market, as that creates more volatility. You can bet that the dip buyers are not going to wait too long before they try to jump in.

It is still a very tough market for stock pickers. I've added a bit to a position in Aurinia Pharmaceuticals (AUPH) and started a small position in ProPetro Holdings (PUMP) , but I see little of interest. I've been lugging a Russell 2000 (IWM) short position -- in the form of the ProShares UltraShort Russell2000 (TWM)  -- and may add to that if the selling pressure continues.

Frankly, we need this sort of pullback for better trading, but it isn't without some pain.

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