The theme of the market action lately has been strength in large-cap technology names that drive the Nasdaq, while small-caps struggles. It is easy to see this in breadth, which has been running quite poorly despite relative strength in the senior indices. This morning, breadth is running more than 2 to 1 negative, but the Nasdaq 100 is positive.
What is going on here is that money managers are hiding in more-liquid large-cap names, while they try to pick up some performance against benchmarks. The way the market started the year left a lot of folks lagging and there is concern about getting too far behind too early.
A couple of big biotech mergers are driving ARIAD Phramaceutical (ARIA) and VCA (WOOF) -- and helping that sector. Recent momentum darling NVIDIA (NVDA) is active once again.
It is a very odd mix of action. There are a few pockets of speculation, such as Enteromedics (ETRM) , Sino-Global (SINO) and NewLink Genetics (NLNK) , but it requires very selective trading if you want to make progress.
Recently, I mentioned Aratana Therapeutics (PETX) is one of my top low-priced picks for 2017. The stock is attracting some attention this morning in sympathy with WOOF, as it is also an animal health play. The company should have some news fairly soon, and the technical pattern there looks attractive.
While I'm always hunting for the next stock picking, the poor breadth and small-cap struggles are making me quite cautious. I'm simply not finding much to trade aggressively -- and when that happens, I end up with higher levels of cash by default. I'm always focused on keeping my accounts as close to highs as possible, and that isn't easy right now -- unless I'm willing to chase something like Tesla (TSLA) or Action Alerts PLUS holding Facebook (FB) , which I'm not.
