The indices are seeing some downside follow through after yesterday's poor session, but the underlying action isn't nearly as bad. Breadth is running better, with about 2,700 gainers to 3,700 losers, but the small-cap indices are outperforming. The iShares Russell 2000 ETF (IWM) is in positive territory while the Dow Jones Industrial Average is the laggard.
Part of the reason for this better action is that biotechnology seems to have found a bottom after an executive meeting with Donald Trump. As is typically the case, Trump walked back a few of his more-aggressive comments, and that has brought in some buyers.
I'm playing a few names in the sector, including Sarepta Therapeutics (SRPT) , Achaogen (AKAO) , Zosano Pharma (ZSAN) and Aratana Therapeutics (PETX) . The group has been under severe pressure due to the pricing issue, without investors making any attempt to sort out which stocks are more at risk.
A new stock on my radar this morning is New Residential Investment Corp (NRZ) . It just closed a deal to buy $97 billion in mortgage-servicing rights from Citibank (C) . It is financing the deal with an offering this morning priced at $15.00. The company pays a substantial dividend, and this deal looks to be accretive. I like the risk/return ratio and have started accumulating.
While the action in the indices is not very attractive, there appears to be a greater focus on stock picking today. Market players are sorting out the winners and losers -- and that produces good opportunities if we keep on digging. You have to be very selective and use stops, but the trading action has improved today.