Because the bears have such limited success in this market, they often tend to become too excited, too quickly when we have a poor open. They want to believe that we are finally going to see the market destruction they have been warning us about.
While there may be a few minutes of fear, it doesn't typically take long for the dip buyers and computer programs to go to work. They almost always will have us comfortably off the lows of the day before the first 30 minutes of trading are up.
We just have too many underinvested bulls, lagging fund managers and well-conditioned dip buyers for things to stay down for long. What we have to watch for is a change in this attitude. If we don't hold the lows of the day and we start seeing lower lows, then the mood will begin to shift and the computer programs will change to try to catch downside momentum. That just doesn't happen easily when we have had so much recent momentum.
Despite the weakness in Action Alerts PLUS name Allergan (AGN), biotechnology is leading the market, which indicates that there is still strong speculative interest out there. This group is probably the best indicator of sentiment right now, and when it's leading it is hard to be too negative.
According to Ryan Detrick, the S&P 500 has moved more than 1% in either direction for 15 straight days. That is the longest streak in over a year. While the bulls enjoy that slow and steady upside, it is refreshing from a trading standpoint to see a good shake once in a while. It helps to create new opportunities and helps charts set up better.
I've made a few minor moves and have a few things on my radar such as Centrus Energy (LEU), TherapeuticsMD (TXMD), TransEnterix (TRXC), Square (SQ) and Integrated Electrical Services (IESC), but I'm waiting for them to develop a bit more before I make additions.