After taking out Monday's highs the S&P 500 gained some momentum but volatility has picked up. It looks like there are sell programs hitting, which isn't something that we have seen that often in the past. The computers are finding they can produce some results with downside action and they are giving it a go.
The S&P 500 is already bouncing back from the dip to intraday lows, which is another sign that it was probably computer driven, but this increases the risk that the bulls will not push into the close. If it is this easy to knock the market down intraday then there is going to be far less confidence in holding longs overnight.
I'm approaching this market right now as trading range action, which means I am going to flip for gains when I have them and look for entries when we have support. The S&P 500 needs to move over 2700 to really change the trend of the action.
The good news is that trading range action into earnings season is good for stock-pickers. The small oils I mentioned earlier are acting well and overall breadth on my screens today is exceptional. I am going to continue to look for some new merchandise but I'm also going to flipping winners for some quick profits.
This is not a market that is going to allow us to ride momentum. There are less than a 100 stocks making new 12-month highs today, which is all you need to know about how well trend-following is working. There is some good trading but don't confuse that with overall market health.
One example of a good chart I like right now is Vericel Corp. (VCEL) .