We have some Monday morning follow through as market focuses on a refinery takeover by Marathon Oil (MRO) , the Sprint (S) merger with T-Mobile (TMUS) , a solid earnings report from McDonald's (MCD) , an oversold bounce in Apple (AAPL) and a benign political environment with increased optimism about a Korean deal.
The poor response to earnings that we had on Friday is being shrugged off now, but that issue will return quickly with a slew of earnings reports still do. The FAANG names have recovered most of the intraday pullback they suffered on Friday and breadth is running at a healthy 4,200 gainers to 2,350 decliners.
There are only around 90 new 12-month highs so far which illustrates how much work the market needs to do to regain its strong momentum. A couple recent names that I have been trading that lost momentum lately are Baozun (BZUN) and 58.com (WUBA) . Both are acting like momentum stocks today, but I'm not convinced yet that this action is sustained.
ETFMG Alternative Harvest ETF (MJ) is bouncing after a pullback and that may be in position for bottom fishing as it develops further. Vericel (VCEL) , one of my favorite small biotechnology names, is breaking out but this is still a very choppy market.
The market chop has made trading increasingly difficult as good earnings are not resulting in sustained moves and there is little leadership. Bad news is having an impact unlike it did prior to February and that is hurting the trust levels. There is now a much greater inclination to sell into strength and that is a big part of why things are so choppy. We are seeing an example right now as the S&P 500 is now hitting its intraday low.
I measure overall market health not by the gains in the indices but the number of attractive setups I see in individual stock. Based on that approach, this is still a very poor market. We have some bounces and a few things moving nice like WUBA, but I do not expect sustained momentum.
The S&P 500 is reversing as I write and is now back to testing the opening lows. Don't be too trusting of this market.
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