The action this morning feels like some of the index rotation that occurred into the end of the quarter is being reversed. Last week the small-caps outperformed while the S&P 500 and Dow Jones Industrial Average lagged. This morning it is the small-caps that are the laggards.
Breadth is running weaker with about 2,700 gainers to 3,600 decliners, but there are 200 new 12-month highs in the early going. The FANG names are helping the Nasdaq, with Tesla (TSLA) , Alphabet (GOOGL) and Amazon (AMZN) doing most of the lifting. (Alphabet is part of Jim Cramer's Action Alerts PLUS charitable trust and Amazon is part of the Growth Seeker portfolio.) Intel (INTC) is helping chips, but other than that there isn't much going on as far as positive themes.
All last week the indices recovered from early weakness and closed near the highs. As I noted, until there is a change in that pattern of strong closes, it is tough to be aggressively bearish. Right now this action is not looking very good, but I want to see if the dip buyers show up and try to produce an afternoon bounce. A close at the lows is what will drive the bears to be more aggressive.
My Stock of the Week, Fortinet (FTNT) , is off to a good start, but there is very limited momentum out there this morning. (Fortinet also is part of the Growth Seeker portfolio.) I am not making any new buys, but I'm not willing to press index shorts until the bears show they can produce a weak close.
We are in one of those environments where these isn't much trading opportunity. The bulls still have some momentum but it's slowing and the bears have yet to do any damage. It is good time to be patient and see who can seize the advantage.