The dip buyers were hoping for some downside follow-through to start the day, but when that didn't materialize they created a gap up instead.The buyers hesitated to chase at first, but they stepped up about 30 minutes into trading and have the indices solidly in the green now.
Breadth is solid at better than 2 to 1 positive, but the Nasdaq 100 is the laggard once again. Market players are shying away from the FAANG names and the high-momentum plays -- and moving strongly into financials. New highs are down to under 70 because of this rotation, but buyers are still looking for a place to go.
The question is whether the momentum names are going to stay under pressure once this oversold bounce dissipates. This is the group that led the market up, but can the indices run higher on the backs of small-caps, banks and other plays of that type?
The last time we had a day like yesterday was on May 17. There wasn't a gap-up open the next day, but there was steady buying for the next week and the cause of that one-day selloff was almost immediately forgotten. That has been a regular pattern, and many market players are looking for it to repeat once again.
I added to a position in Nutanix (NTNX) on news of an agreement with Alphabet (GOOGL) for migration of clients to the Google Cloud. This was a past Stock of the Week, after its positive earnings report, and continues to look promising over time.
I also am starting to build a position in Direxion Daily S&P Biotech Bear 3X ETF (LABD) . The biotech group had a big run over the past two weeks, and I'm looking for some profit taking to pressure the sector while it awaits news on the health care bill.
I continue to have limited confidence in the upside, but with this market, you can't ever count out the potential for V-shaped moves after a day of poor technical action. Small-caps are moving briskly as the V-shaped move takes shape.
