The market has been in flip-flop mode recently with alternative days of weakness and strength. While the indices were positive on Friday they had faded for most of the day and there was notable weakness in both banks and major retailers. Banks have found their footing today and there is unusual interest in consumer products.
As I discussed last week, the hot spot is precious metals. Gold is on a ferocious run as are many of the small-cap mining names. My Stock of the Week is off to a particularly good start and recent trades Seabridge Gold (SA) and DRDGOLD (DRD) continue to run in parabolic fashion.
Overall, the market action has been a series of bear and bull traps. Today it is the bears that are being trapped as the buying momentum is now kicking in. Breadth is very strong with almost 5,000 gainers to 1,400 decliners.
Technically, we are in a trading range and we keep seeing support, but the upside momentum has not been sustained. Conditions continue to favor the bulls but it sure is easy to make a bear case if you are so inclined.
I've been mainly trading the gold miners but I have a few other names on my radar such as Square (SQ), Teekay Offshore Partners (TOO) and Yirendi (YRD). It is very tempting to try to call a top in this market but it is better to wait for some weakness before giving it a try.