If you follow the patterns of this market, it shouldn't be too big of a surprise that we have strength on Monday morning after closing Friday on the verge of a technical breakdown. One consistent pattern of this market has been to bounce back and confound the bears when it looks like we need to start being more defensive.
The likelihood is that this action is a consequence of computer programs that find the best trading opportunities just as sentiment seems to be turning more negative. They easily trap the overly aggressive bears and frustrate bulls with too much cash.
We have strong breadth this morning with small-caps and speculative groups like biotechnology and semiconductors leading. The big-cap FANG names ¿ Action Alerts PLUS holding Facebook (FB), Growth Seeker name Amazon.com (AMZN), Netflix (NFLX) and Alphabet (GOOGL) -- are lagging but the small-caps are making up for it and the Warren Buffett buy of Apple (AAPL) is a nice boost for the indices.
Once again precious metals and mining are leading. Names I've mentioned lately such as Teck Resources (TCK), Silver Wheaton (SLW), DRDGOLD (DRD) and Silver Standard Resources (SSRI) SSRI are acting well and are the main focus of momentum traders.
I don't have a high level of confidence that this bounce will be sustained, but I'm doing my best to stay with some longs. My Stock of the Week, Celato Pharmaceuticals (CPXX) is off to a good start and I'll be looking to add some on a strong close.
Once again, it's a market that frustrates the bears and the underinvested bulls; but that is nothing new.