According to Ryan Detrick of LPL Financial the S&P 500 has not dropped more than 0.6% in 99 consecutive days. That is longest streak in history, surpassing 86 days way back in 1965.
The natural reaction to such a statistic is: "we are due." The market can't stay this lopsided for that much longer as it just isn't statistically possible unless we truly are in a new age of market action.
This attitude that a deeper pullback has to occur fairly soon tends to make market players react very quickly to any sign of weakness. No one wants to be caught in the drop that will occur when this streak ends so they tend to overreact to minor weakness like we had at the open this morning.
Of course the indices have bounced back now and the Nasdaq 100 ETF (QQQ) even went green again. Breadth has actually gotten worse and is running at about 2000 gainers to 4850 decliners. There are also over 200 stocks hitting new 12-month highs.
It is stealth correction action on a very small scale, but that has a been a very common dynamic in recent years. The indices tend to cover up underlying weakness as a small group of big caps rotate and hold things up. There is definitely more weakness in small caps today and that is something we will have to watch.
A couple new names I'm adding to today are RISE Education (REDU) which has been forming a very nice base around $16.50 and looks in good shape for a run at the highs it hit over $17 following its IPO in October.
Immersion Corporation (IMMR) develops touch sensitive technology that is used in a wide variety of electronic devices. It was announced today that they settled a suit against Apple (AAPL) . The company still has suits pending against other companies such as Samsung (SSNLF) and Fitbit (FIT) which are more likely to settle.
Quite often when a stock jumps big on news like this, the actual financial impact is not fully discounted immediately. An analyst from Craig-Hallum believes that IMMR could see earnings of $1.50 to $1.80 if more settlements are made. That would easily justify a substantially higher price.
