Don't Trust the Bounce Yet

 | May 18, 2017 | 10:57 AM EDT
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There was some hesitation, but the bounce has kicked in and the action has improved. I suspect that Treasury Secretary Mnuchin's testimony is helpful, as it takes the focus off the political issues. What the market wants is some progress on fiscal policies -- and that is what they are talking about.

Breadth has move up off the early lows and is close to flat. There are only 50 new 12-month highs and 115 new lows. This has turned down quickly, but that is because the rally was so narrow for so long. Half the stocks in the market are already under their 200-day simple moving average. This was not just a one-day correction. Most of the market has been correcting for a while, which is one of the reasons we are bouncing back.

As I commented on Twitter, I have covered my index shorts and am working on some select buys. Shark Biotechnology is very positive on GlycoMimetics (GLYC) , following some news, and I have been building a position in it today. The Trade Desk (TTD) had a great earnings report last week, and I'm building that as it moves around. I want to put some more cash to work, but am moving slowly.

It feels like there is some squeeze action taking place now. It is still too early to be trusting of this bounce, but this is how the quick and easy recoveries always start. Suddenly the folks that were playing defense are now worried about being left out -- and that puts bids under the action.

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