Within the first hour of trading the shallow dip in the indices was bought and the S&P 500 made a higher high. As I suggested in my opening post, we have a rotation back into the bigger cap names. While Russell 2000 ETF (IWM) is up 0.7%, the DJIA is up 1.4% and the S&P 500 is up 0.9%.
Recently the market action has favored stock pickers and speculative trading in groups like biotechnology. This morning we are shifting back to index driven action that favors FAANG names -- Facebook (FB) , Amazon (AMZN) , Apple (AAPL) , Netflix (NFLX) and Alphabet (GOOGL) -- and bigger cap semiconductors and technology names.
The big question is whether this action will be sustained. Does putting the China trade war on hold signal that we will see continued momentum? It is too early to say but the fear of being left out is kicking in and we have higher highs intraday. Breadth is running 4700 gainers to 2000 decliners and the number of new highs is up to 375.
A couple names on my radar that are clear beneficiaries of the China deal are Cheniere Energy (LNG) and Starbulk Shipping (SBLK) . LNG runs ports for the shipping of natural gas which is the biggest commodity demanded by China. SBLK is a dry bulk shipper which will benefit from increased shipment of agricultural products from the U.S. SBLK is my Stock of the Week.
I've been heavily trading biotechnology lately and that group seems to be slowing a bit as this rotation takes place. I don't have many new names on my radar yet but they should develop as we see what leadership emerges from here.
