I mentioned this morning that Netflix (NFLX) may be viewed as a company specific issue that doesn't have broader market ramifications. So far that seems to be the case. There is some relative weakness in the FAANG names but what we are seeing so far is the reverse of yesterday. Today the DJIA is trading in the red while breadth is quite good with about 3700 gainers to 2750 decliners. Yesterday, when the banks were hot, the DJIA was in the green and breadth was close to 2 to 1 negative at times.
(For more on NFLX, see Jim Cramer's Why Netflix's Bungles Are Bringing Down the FANGs.)
We have some good old-fashioned dip buying off the weak open but there are only 66 stocks hitting new highs while over 70 are at new lows. The momentum and price action has been quite choppy lately which is reflected in both the shifts in breadth and the number of new highs. Banks seldom are good leadership groups for long but so far they are holding onto yesterday's gains. I'm holding some Bank of America (BAC) and have added to the position.
One group that is looking much better today is biotechnology. That is always a positive as it shows an appetite for more speculative stocks that don't necessary have good revenues or earnings.
Oil is weak again but I see that Jim Cramer has been averaging into an oil pick in his Action Alert Plus Portfolio. I like the idea of averaging into some oil exposure and my preferred vehicle is a small cap - W&T Offshore (WTI) .
The indices are going straight up from the gap down opens and it is probably being driven in large part by the testimony of Fed Chairman Powell. He is taking a very market friendly view and suggests that we are in a sweet spot with low inflation and enough growth that some rate hikes won't be a problem. He doesn't seem concerned about the trade war issue and is generally upbeat. The market always loves to love central bankers and Powell is making it easy.
I've not done much new buying today but it is a relief to see some better action in small caps. I'll be looking for more inventory but, in view of the recent choppiness, I don't expect the market to run away to the upside. It is a nice to see the dip buyers active but the problem is that they haven't tended to stick around for long.
