Does anyone remember what happened last Wednesday? The market had its worst action of the year and the bears were convinced that Trump political issues were going to kill the uptrend that has been in place since the election last November.
It sounds like a logical argument, but that doesn't work in this market. It was another case of one day of negative action that is quickly forgotten. There was another brief bout of selling on Friday afternoon, but this morning the market is acting like it doesn't have a worry in the world. Breadth is running around 3 to 1 positive and we have about 300 stocks making new 12-month highs. There are some pockets of momentum, like Impinj (PI) , Puma Biotechnology (PBYI) and Oclaro (OCLR) . FANG names started slowly but are now back to their steady climb.
It is another classic V-shaped bounce -- when it seemed like such a thing would be very unlikely. It is a good example of how it is the machines, driven by price action, that are determining market movement -- more so than any fundamental argument.
The easiest way to be misled in this market is to think that political news matters. What matters most is simply finding a way to stay ahead of the crowd and that usually means buying any and all weakness.
Despite the good action in the indices, I'm not putting much money to work. The bounce is now long in the tooth and we have gone from oversold to overbought so quickly that if you blinked you missed it.
I don't expect to be able to do much new buying until there is either a pullback or some flat action to create some new entry points. Chasing the third day of a bounce may work well for the computer programs, but it is tougher for a human that still has a preference for certain technical setups.
One of the top stocks on my list right now is The Trade Desk (TTD) , which is trading up nicely despite announcing the filing of a secondary offering. I'll be looking to add to that position, but when its trading up a $1 on the news it is probably better to wait a bit.