Even the Bulls Are Rooting for Weakness

 | Apr 15, 2016 | 12:01 PM EDT
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Stock quotes in this article:

ccrc

,

drwi

,

iesc

,

mitk

,

yrd

It is a lazy Friday and the indices have had a good run and are in need of a rest, which would seem to indicate that some selling might take hold. That may sound logical, but so far the indices continue to hold up remarkably well. Breadth is running 34-30 in the green and the indices are flirting with minor gains. Weakness in oil is being shrugged off and there isn't any notable weakness to be found.

I mentioned this a couple of times yesterday but it bears repeating as it explains the market. Strong markets don't just suddenly reverse and close down. A move like we had off the February lows creates a big supply of underinvested bulls and they provide very stubborn underlying support.

One of the ironies of this market is that many bulls are rooting for weakness along with the bears. They want some dips and weakness to buy. They can't keep pace with straight-up action. Their best hope of relative performance is to buy on pullbacks rather than to chase strength.

When you look at the market through that lens, the action makes more sense. People aren't buying because they think fundamentals are fantastic. They are buying because they are trying to keep pace and are petrified they will be left behind again. There just isn't any short-term benefit to a bearish bias or calling a top.

I'm dinking around with various odds and ends, but nothing very substantial. Names like China Customer Relations Centers (CCRC), DragonWave (DRWI), Editas Medicine (EDIT), Integrated Electrical Services (IESC), Mitek Systems (MITK) and Yirendai (YRD) are on my watch lists, but I'm just flipping them for quick trades. I'd prefer to build some bigger position trades, but I'm not finding much I want to work with right now.

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