Today is one of those days when the indices are not doing a very good job of summarizing the overall action. While both the DJIA and the S&P 500 are trading around flat, there are twice as many stocks that are trading down than up. Breadth is around 2,300 gainers to 4,600 decliners which is quite poor and certainly presents a much different picture than the DJIA, which is up about 0.04%.
What is going on is that a smaller group of big caps that are over-weighted in the indices are offsetting the losses in dozes of smaller stocks. In the Dow and S&P 500 it is banks that are doing the heavy lifting. JPMorgan Chase (JPM) , the Travelers (TRV) and Goldman Sachs (GS) , all in the financial group, are the best movers in the DJIA today.
Unfortunately for the broader market these banks are not good leadership stocks. They are no helping any other sectors of the market. There is notable weakness in biotechnology, oil, semiconductors, technology. Seven of the top 10 losers in the S&P 500 are oil-related names.
This sort of rotational action isn't unusual but its important to make sure that you understand it is distorting the technical action in the indices. This is not nearly as healthy as you might think if you just glanced at the Dow ticker on CNBC.
I focus on individual stock picks and primarily smaller cap names. From that point of view, this is ugly action. There are no pockets of safety beyond the big banks and there is no interest in buying the weakness so far. It isn't bad enough selling to do any major damage but it is troubling to see so little buying support.
We shall see if bargain hunters show up, but it's a good thing we have earnings and Jerome Powell coming up. This market needs something positive to think about.