Breadth is almost 7 to 1 negative, and the major indices are down more than 1.5%, but money is flowing to a few big-cap momentum names like Chipotle Mexican Grill (CMG), Apple (AAPL), Green Mountain Coffee Roasters (GMCR), Hansen Natural (HANS), MAKO Surgical (MAKO), Pharmasset (VRUS), Wynn Resorts (WYNN), Alexion Pharmaceuticals (ALXN) and so on.
On the other side of the equation, there is very little interest in small caps, and the oil and commodity names remain under substantial pressure. Market players want the safety of greater liquidity and have little appetite for speculation, even in names with solid fundamentals.
The important thing now is that we hold above the morning lows. If we can do that, then it will give us some support for a better move as we await the Fed decision on Wednesday. I doubt the bears will want to be very aggressive about betting against the Fed, so I'm looking for us to see some underlying support.
It continues to be a challenge to put money to work, and that is probably why so many folks are hiding in the big-cap names. It is much easier to part some cash there and then hope enough other people feel the same to hold them steady.
We needed to correct after the straight-up action last week, but we are still extended. If the big-cap names start to falter, look for the correction to go deeper, but if breadth improves, we may have some support. I'm leaning slightly bearish and will be more so if we take out the early lows.