We're Swimming in a Sea of Green This A.M.

 | Jul 12, 2017 | 10:24 AM EDT
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The combination of poor positioning on the Donald Trump Jr. news yesterday and a dovish tone in prepared remarks by Fed Chairwoman Janet Yellen has the market in a frisky mood this morning. Futures gained strength all morning and there was a sizable gap higher to start the day. Breadth is very strong at around 5 to 1 positive, and new 12-month highs are up to more than 250.

There is some underperformance in the FAANG names, with Apple Inc. (AAPL) trading in the red. Banks and biotechnology are a bit sluggish, but there is broad strength. Not much is standing out as the number of stocks up more than 5% is small, but it is sea of green.

The big question now is whether the bulls can build further on this strength. The S&P 500 has not been able to build on the last few gaps higher. On June 13, June 19, June 28 and July 5, the S&P 500 SPDR (SPY) gapped higher to start the day but then traded substantially lower the next day.

The lack of follow-through has been the most notable aspect of the market from a technical standpoint. Traders will be watching this careful and will not want to be caught in a reversal once again.

I don't have nearly as much long exposure as I'd like, but I'm sticking with what I brought to the party. I'd like to find a few new dance partners, but this gap up open is not making it easy. One chart that caught my eye last night is Sangamo Therapeutics Inc. (SGMO) . It needs to move through the $9.50 level to bring in the momentum and breakout buyers.

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