We have "gap and flat"' action this morning following the French election results. The bulls aren't building on the strength and the dip buyers are preventing any meaningful pullbacks so far.
What often happens on news events such as this is that many market players had plans to buy a gap down if there was a negative reaction to the news. When that doesn't occur, they refuse to chase strength but they will buy even a minor pullback. As long as they aren't buying the highs they still are willing to buy.
Breadth is running about 3 to 1 positive and new 12-month highs have exploded to more than 700, but the challenge of the market for two months now has been finding sustained momentum. We have big one-day moves but they keep fizzling out after a day or so.
The bears are grumbling that there really wasn't anything surprising about the French election, and why should an economy no bigger than California have much impact anyway?
Whether the response is justified isn't the point. The point is positioning. If you aren't positioned long you are struggling with what to do here. Do you look for a reversal or do you try to find some entry points?
I'm looking for entry points but have barely found a thing I like so far. I've actually been a net seller of things such as Sarepta Therapeutics (SRPT) , although I'm only about 30% invested at present. I'll be more likely to be a buyer as the day progresses and there is more proof of support.
The strength of this move caught many people by surprise, which tends to create underlying support. However, there is a greater tendency to "sell the rips" lately and we'll see if that theme continues.
