Messing Around With Small-Caps in This Market Holding Pattern

 | May 02, 2017 | 10:41 AM EDT
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Stock quotes in this article:

aapl

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IWM

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googl

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nflx

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amd

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rlgt

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auph

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hiiq

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TZA

Although Apple (AAPL) is trading up nicely in front if its earnings report tonight, the big-cap technology stocks have lost some momentum and aren't driving up the indices like they did yesterday. The iShares Russell 2000 ETF (IWM) is lagging again, although breadth isn't that bad, with about 2,800 gainer to 3,300 losers.

The best approach to this market lately has been to either stick with the big-cap names, like Alphabet (GOOGL) and Netflix (NFLX) or to be highly selective with the more speculative small-caps. There has been some very difficult trading in groups like the opticals and chips. Advanced Micro Devices (AMD)  is a good example of the challenges.

We are in a bit of a holding pattern now, as we await Apple earnings and the Fed interest rate decision tomorrow. As I discussed in my opening post, seasonality is turning down after a positive start to the month of May -- and that is probably having some influence on programmed trading.

I'm messing around with some smaller trades, such as Radiant Logistics (RLGT) , Aurinia Pharmaceuticals (AUPH) and Health Innovations (HIIQ) .

I'm also slowly adding to a short position in IWM in the form of Direxion Small Cap Bear 3x (TZA) . I started that position on Friday, as I found the underlying action troubling and I'll be looking to build it further.

Without the strength in the small group of big-caps, this market has a very different feel to it and is probably more reflective of what is going on with the average stock.

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