The bulls are building on yesterday's strength but the positive sentiment is reaching levels that is causing some bears to believe it may be a contrary indicator. Some of the positive feels are seasonal but the continued trust in the Trump rally is causing quite a few pundits to wonder how much longer it will last.
I've thought it likely that we'd see the Dow 20,000 level fall before any meaningful correction would occur, but that thinking may be too obvious and too crowded. If the indices take out yesterday's lows I'll be very bearish very quickly.
In the meantime I'm trying to knock out some individual trades -- and it is not easy. The biotechnology sector is leading this morning, which is probably due to the January effect. Many of the names in this sector suffered tax-loss selling in December, and now they are starting to bounce back as the pressure is reduced. I'm holding a small position in the Direxion Daily S&P Biotech Bull 3X ETF (LABU) and also am trading some names in the sector including Global Blood Therapeutics (GBT) , Achaogen (AKAO) , Sarepta Therapeutics (SRPT) and Aratana Therapeutics (PETX) .
The biggest difficulty right now is finding themes that are working. Financials, oils, technology and FANG names aren't doing much. There are some scattered movers, and breadth continues to run quite strong, but it is much more mixed action.
The indices are rolling over a bit as I write but the line in the sand is yesterday's lows. If that comes into play be ready to move quickly.