In the "old days", fading a gap-up open like we had this morning was a pretty easy trade. It was routine for traders to sell into the strength, lock in some profits and then wait for a pullback to re-buy. It is not nearly as easy these days.
Gap-up opens just aren't sold as readily as they once were. Part of it is due to the way the computer algorithms operate and part of it due to the fact that we have chronically underinvested bulls and nervous bears. Folks are not positioned well to fade strength, even if they were inclined to do so.
The rally this morning is of particular importance, because if it can hold and gain some traction as Brexit fears subside then we are once again on track to test those all-time highs. When the market was celebrating the central bankers it was easy to do, but now it is not so certain. We unquestionably have some economic weakness, and trust in the central bankers isn't what it once was.
My game plan is to stay reactive with overall market direction. The uptrend is still under pressure and if we have a weak finish today it will give the bears an edge. We are going to continue to dance around on the Brexit issue all week and if the "stay" faction gains traction, it is going to put some bids under the market.
Rather than worry too much about the direction of the indices, I'm going to focus on some individual stock picks. My Stock of the Week, Teck Resources (TCK), is off to a good start and the mining sector in general continues to look interesting. MeetMe (MEET) and Bio Telemetry (BEAT) are on my radar, but with the indices practically flat intraday we have to wait a bit to see entries develop. The bulls really need a trend day to help turn the tide, and they may not have the momentum to do it.