Now that the Fed drama is on hold for a few days, the question becomes whether the indices have enough momentum to overcome slightly overbought conditions. Ironically the worries created by Janet Yellen also created a positive dynamic, as so many market players are always anxious to buy dips. The bulls were lined up to buy any weakness on Yellen's speech yesterday, but they never really had a chance.
The Fed is now in a blackout period in front of its meeting and interest rate decision next week. There won't be any comments to trip things up, but those comments often create a decent trading opportunity.
I continue to believe that the S&P 500 is on a mission to break to new all-time highs, but it may hesitate a bit. It actually would be quite healthy to pause here. I'm not concerned about a major reversal now, as it is very likely that the dip buyers are still looking for entry points.
Breadth has cooled but is still quite healthy. Biotechnology is struggling but quite a few small-caps are attracting speculative interest. It is one of those days where you have to find the pockets of momentum if you want to have an edge.
I added to Acacia Communications (ACIA), which was a big winner as a recent Stock of the Week. It has initial coverage today and there are good target prices. I also have a number of small stocks of interest on my radar: Teck Resources (TCK), Huttig Building Products (HBP), Synacor (SYNC) and Xinyuan Real Estate Co. (XIN). My current Stock of the Week, Silver Wheaton (SLW), continues its ascent.
Please note that due to factors including low market capitalization and/or insufficient public float, we consider HBP, SYNC and XIN to be small-cap stocks. You should be aware that such stocks are subject to more risk than stocks of larger companies, including greater volatility, lower liquidity and less publicly available information, and that postings such as this one can have an effect on their stock prices.