• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Doug Kass
    • Bruce Kamich
    • Jim Cramer
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Investing

Rev's Forum: This Is Nearly Perfect Bullish Action

The obvious course of action is to look for ways to put capital to work.
By JAMES "REV SHARK" DEPORRE
Feb 10, 2017 | 07:25 AM EST
Stocks quotes in this article: CLF, PAYC, DECK

"Do not wait until the conditions are perfect to begin. Beginning makes the conditions perfect."

-- Alan Cohen

Maybe it is too obvious, but the technical action in the market is very positive. This is textbook action. There has been a long period of consolidation since mid-December, a couple of thrusts to the upside and then a breakout to new all-time highs on good volume. Breadth was exceptional strong and, after some recent struggles, small-cap stocks gained some vigor and provided a foundation for the move.

There were over 600 stocks making new 12-month highs, with chips, financials, steel and several other sectors leading the way. Earnings have been generally good, with some big moves in names like Cliffs Natural Resources (CLF) , Paycom Software (PAYC) and Deckers (DECK) .

On Tuesday, the bears were yapping about the highest bullish sentiment readings in years. This, of course, is viewed as a contrary indicator, based on the theory that the buyers must be running out of cash if they are already so positive about the market. The problem with that theory is that it fails to measure the degree of bullish conviction. There may be quite a few folks who are optimistic about this market, but they aren't totally convinced. While there is optimism, there isn't wild enthusiasm. There is still buying power in reserve.

In addition to the bulls still being able to fuel additional buying, there is also a big group of bears that are convinced that the "Donald Trump Rally" is going to come screeching to a halt at any time. They are convinced that fulfilling policy promises will prove to be quite difficult and that the personality flaws of the President will led to chaos. Many of these bears seem incapable of separating their political biases from an objective valuation of the market's technical action, and that provides for fuel for the upside.

Technical and fundamental conditions are strong for further upside, but if there has been a flaw in the recent action it is the lack of sustained momentum. There have been a couple of previous attempts at a breakout that failed to gain traction after a strong move like we had yesterday. Buyers have been hesitant to chase too aggressively, and have shown a preference for buying dips instead. That has led to some very strong underlying support and the inability of the bears to make any progress, but it has kept the indices in a tight range for a while.

Yesterday's move took us out of the trading range and gives the bulls an opportunity to show they can produce some momentum. The basis for the move yesterday was some vague promise that a Trump tax plan is coming soon. That sort of news can't be disputed and the lack of details makes it easy for the bulls to embrace as a major positive. It probably won't be easy to work out the actual provisions and push it through Congress, but for now it is major positive and an easy justification for more buying.

To put it in simple terms: The market is in an uptrend and the bulls have the advantage. The obvious course of action is to look for ways to put capital to work so we can ride the trend higher. It may sound simplistic, but that is what is working.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

At the time of publication, Rev Shark had no positions in the stocks mentioned.

TAGS: Politics | Risk Management | Stocks | Investing | U.S. Equity | Markets | Economy | How-to

More from Investing

Surface Oncology Is Set for Further Gains - How to Buy It

Bruce Kamich
Jan 19, 2021 3:25 PM EST

Here's our price objective.

My Preference With OneSpan Is Calls So I Can Define My Risk

Timothy Collins
Jan 19, 2021 2:36 PM EST

The last few post-earnings beat downs were greeted with optimism once traders got over the initial disappointment.

A Top Biotechnology Play for 2021

James "Rev Shark" DePorre
Jan 19, 2021 2:07 PM EST

Forte's sole clinic candidate is FB-401 for the treatment of atopic dermatitis, which is the scientific name for eczema.

Boot Barn Gets a Quant Upgrade: Do the Charts Fit?

Bruce Kamich
Jan 19, 2021 1:53 PM EST

Here's our latest analysis and trading strategy for the shares.

T-Mobile Is a Way to Play 5G, but Hold the Line for Now

Bruce Kamich
Jan 19, 2021 1:06 PM EST

Traders should stay cautious of the long side of TMUS for a while.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 11:09 AM EST GARY BERMAN

    Is Copper About to Turn to Rust?

    Below is a very long-term copper chart.  As you...
  • 08:02 AM EST GARY BERMAN

    Tuesday Morning Fibocall for for 1/19/2021

    SPX (Long-Term View) The 1/8/21 high @ 3826.69 i...
  • 09:01 AM EST JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    When it's time to sell, will you act or freeze?
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2021 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login