The battle between negative market news and positive momentum is intensifying, with the bears making minor progress. The indices are close to flat and breadth is running slightly positive, but consistent underlying support continues.
There's a dip in oil, a mediocre Intel (INTC) report and weakness in China -- but that isn't scaring anyone so far. The FANG names were holding up earlier but are now pausing while biotechnology is flatlining. The mining shares are still running, and my Stock of the Week, Teck Resources (TCK), continues to lead the charge. There isn't any real clear leadership today but there is a mishmash of stocks still working, like Integrated Electrical Services (IESC), which I wrote about yesterday.
With momentum slow, I'm finding fewer trades and that is forcing me to be less bullish. I don't need to look at the indices to tell me whether I should be more cautious. I simply need to take note of the fact that I'm not finding anything new to buy. As I protect profits in my positions, I will automatically be more defensive if I can't find new buys. I don't need to predict what the indices are going to do, I just need to stick with my discipline.
Because I have not found anything new that I want to buy today, I'm keeping stops tight to protect profits. I don't try to call tops, but my positioning is starting to look like one is developing.
Please note that due to factors including low market capitalization and/or insufficient public float, we consider IESC to be a small-cap stock. You should be aware that such stocks are subject to more risk than stocks of larger companies, including greater volatility, lower liquidity and less publicly available information, and that postings such as this one can have an effect on their stock prices.