We have some choppy action this morning as the market consolidates two big days of gains. Of course, the bears tend to become very excited at the first indication of any weakness, but in the bigger scheme of things this is exactly what is needed. If the selling accelerates it may be cause for greater caution, but at this point it is far more positive than negative.
Breadth is running about 3,100 gainers to 3,250 decliners and there are over 600 new 12-month highs again. The hot sector this morning is oil. The big-cap technology names are taking a rest after a very aggressive run. Biotechnology tried to bounce but that move fizzled out quickly. Miners and precious metals are weak.
While the selling is run of the mill, that doesn't mean we don't have to play some defense with individual positions. If I have bigger-sized positions, like I did in Oclaro (OCLR) , I make partial sales and then look for the opportunity to buy again lower. I also sold down my trades in Alibaba (BABA) and Teck Resources (TECK) for similar strategic reasons.
I'm looking for some entries in oil but they are mostly extended very fast. I did start a position in Carbo Ceramics (CRR) , which is testing overhead from back in August.
The nice thing about this action is that it allows us to do some incremental buys in stocks that have developing charts. Once you have a toehold, it is much easier to act aggressively as the technical pattern solidifies.
The dip buyers are stepping up as I write and we should expect them to stay aggressive for a while.