The market is teasing the bears today, with some signs of stress, but the computer algorithms are still hard at work buying dips. We do have some underlying weakness in stocks related to infrastructure, due to the likely delay in expected programs, but the bulk of the market bounced back sharply from a "sell the news" reaction to comments from Treasury Secretary, Stephen Mnuchin.
The pattern of bouncing back from morning weakness has been so consistent for so long that expectations that today may be the day it changes were too high. It was a perfect setup for the bears to be squeezed once again.
There is relative weakness in small-caps today, and breadth is running slightly negative, but we still have over 750 stocks hitting new 12-month highs and the DJIA is in positive territory for the 10th straight day. It is a different mix of action, with some issues in a few sectors, but the buyers remain stubborn.
While I remain very respectful of the fact that the uptrend is still firmly in place, the action in many individual stocks that I follow has forced me to be more cautious. I see almost nothing I'm anxious to buy right now, and I'm being forced to take some stops on things that looked quite good a few days ago -- like Cliffs Natural Resources (CLF) and Oclaro (OCLR) .
The stocks I'm watching aren't confirming the strength in the DJIA and S&P 500, which is a good reason for me to be more aggressive with defence.