My primary market theme recently is that we are seeing trading range action. The bulls did a good job of taking us to the top of the range as some of the concerns about Syria and China trade eased, but in trading ranges the market finds reasons to reverse.
There are no blaring negative headlines that drove the reversal. What is driving the selling is the reversal in banks following what looked like strong earnings reports. This is a good example of the sort of 'theme' that we have to watch for as earnings season continues.
Banks have been a bit of a 'no brainer' recently as higher rates and the potential for a steeper yield curve bring in buyers. Buying banks on a hawkish Fed is an obvious trade and may actually be too obvious.
In addition to the 'sell the news' reaction to banks I'm seeing some strong negative action in groups like China internet-related names which may be partially algorithm driven. Alibaba (BABA) , Weibo (WB) , Sina (SINA) , YY (YY) and Baozun (BZUN) are all being hit. BZUN has had the best technical action in that group and I have been adding to my position on the weakness today.
Another foreign stock being hit today is PagSeguro Digital (PAGS) . This is the Brazilian Square (SQ) . It had initial coverage today from KeyBanc and a $42 target but sold off anyway. I used the dip to add to my position.
The S&P500 is bouncing back a bit as I write but all you really need to know about this market is that it is trading range action. That means you can't chase strength too much and that there may be opportunities on dips. Earnings season should be fun for opportunistic traders.
