The market battled back from a poor open and the senior indices even managed to end with minor gains, but it was tired action with a few big-caps, Microsoft (MSFT), Apple (AAPL) and Google (GOOG), doing most of the heavy lifting.
I heard comments today from traders who were pleased that individual stock picking was working a little better. There was some hot money in small-cap oils, including Mitcham Industries (MIND), Flotek (FTK), Magnum Hunter Resources (MHR), Kodiak Oil & Gas (KOG) and Provident Energy (PVX). It was refreshing to see decent momentum in a few places.
The big question is whether the market is vulnerable to a pullback as positive seasonality winds down and we enter earnings-warning season. We are still a bit overbought and the action has been a little tired, but we were able to shake off European worries and the struggling euro.
One thing that has plagued this market for a while is the lack of any real leadership. As I mentioned, the energy names have probably been the best momentum group lately, but other than that, it has mostly just been random names here and there and no major themes. That needs to change for us to have a powerful market move. Strong markets need leadership, and this one doesn't have much.
Overall, the market is in OK shape but a bit tired and in need of more energy and leadership. I don't think it will take much to produce a bout of selling, and I'm looking harder on the dark side. I continue to see quite a few potential short setups but they aren't cracking yet, and there is no reason to be aggressive prematurely. But I definitely will be ready to pounce at the first sign of a negative catalyst.
Some select longs are working, but the shorts are developing. It sounds like a good market for trading.
Have a good evening. I'll see you tomorrow.