After the Fourth of July celebration on Wednesday, the market looked hungover this morning. Despite some positive news about possible easing of tariffs on automobiles, the market traded poorly out of the gate and sold off for about the next 90 minutes.
Around 11 a.m. ET buy programs hit and have fully recovered the early pullback plus more. Breadth has expanded nicely to around 4.800 gainers to 2.050 decliners and the mood has improved.
There has been no major news to cause the shift in the action. It is likely that there is some hope that there will be news soon about China but tariffs are scheduled to be enacted Friday and there is little likelihood that will change.
What we have is some random trading action, which is due in part to the random action we had on Tuesday into the close. The indices are basically back to where they were at midday before the holiday.
In my prior note I spelled out why I'm, a reluctant bear. Even though the market has bounced back since I wrote that, there is no significant change in the action. There continues to be a lack of setups and I am still having a hard time putting cash to work.
One stock on my radar this afternoon is Stitch Fix (SFIX) , the online stylist and personal shopper. The stock has been in a loose trading range since breaking higher in June and is consolidating as it sets up for a possible run at the recent highs around $30.
While I see other names that are trying to find support, I am unconvinced so far. I'm far more interested in buying stocks that are making sustained moves than I am in buying stocks that are at lows.
With the tariffs going into effect Friday there may be some inclination to sell into the close again. We'll see how we finish but despite the green this market is not convincing.