The bears were a bit excited about a little early weakness, but this is textbook consolidation after a big run. There is no rush for the exits, and breadth is tracking positive at about 33 to 28. FANG names are holding up, and we have oil and metals adding to the upside.
In this sort of market, I maintain a bullish bias and keep digging for new buys, but I tighten up stops a bit to make sure I protect my recent gains. It is very easy to be too aggressive in taking gains after a good run -- which is one of the reasons that so many bulls find themselves underinvested when we have straight up moves. Remounting is extremely difficult when the pullbacks are so shallow.
The battle in this market, right now, is between big-picture bears that have all sorts of negative arguments -- starting with a more-hawkish Fed -- and the bulls that stay focused on price action. Many bulls simply don't care about the macro negatives because the price action doesn't reflect them.
The price patterns in this market have been consistent for years now. Rallies like the one we've seen over the last couple of days tend to have legs. The bears will attack very quickly, but when the pullbacks just don't develop, it forces short covering and squeezing.
While I'm not wildly bullish, I'm definitely not going to try to call a short-term top. My desire is to buy more longs as they develop. It would be nice if I had more on my screen, but I'm looking at a few things -- like Quorum Health (QHC), Teck Resources (TCK) and Silver Standard Resources (SSRI).
My Stock of the Week, Acacia Communications (ACIA), continues to act extremely well. It was up 30% for the week a few minutes ago, but does look like it may finally rest. This is one I'll keep on the radar for quite a while, as it develops further.
The hunt for more long inventory continues.