The challenge of this market recently is that neither bulls nor bears are able to generate sustained momentum. Yesterday the bears had a chance, but dip buyers and a strong afternoon destroyed their advantage.
Today, it is the bulls that are enjoying a bounce, but the issue is whether than can build on the early strength. Breadth is the inverse of yesterday, with about 4,250 gainers to 1,900 decliners, but the list of new 12-month highs is sedate -- at about 170.
When you look under the surface, it is obvious that the action is driven more by the indices than individual stock picking. In a market where stock picking is predominant, there will be some strong sectors and pockets of momentum. What we see instead is that stocks are moving in correlated fashion and there are very few with big moves. On my scan of charts that are moving big, there are only a dozen or so names -- and mostly lower priced.
Regardless of what is causing the movement, it is nothing more than trading-range action that isn't offering much opportunity. This is not a market where trend followers can load up and ride the move. If you want to trade, you have to maintain short timeframes and be ready to flip. There are markets for chasing, but this isn't one of them.
I'm trading some small odds and ends, like Broadwind Energy (BWEN) , Radiant Logistics (RLGT) and Genocea Biosciences (GNCA) . Aurinia Pharmaceuticals (AUPH) is on my radar again, in front of its conference presentation tomorrow.
Small-caps are outperforming, while the DJIA lags due to IBM (IBM) . I'm going to focus on some short-term trades and stay patient while the indices try to figure out if they are going to ever commit to a new trend.