For the third straight day the indices are doing a poor job of indicating what is really going on in the market. The Nasdaq 100 ETF (QQQ) is down 1.3% but about 80% of that loss is due solely to Facebook (FB) . The Nasdaq is also impacted by Facebook but both the DJIA and the Russell 2000 ETF (IWM) are up as breadth is actually pretty good with about 3850 gainers to 2800 decliners.
The poor action in Facebook is impacting other FAANG names but the majority of the market is ignoring that action and looks okay. There still isn't much leadership or strong momentum but the majority of the market is performing well.
Facebook is not seeing the same sort of energetic bounce that Netflix (NFLX) saw after its poor report. Market players are concerned that the problems are a bit deeper and they are not as optimistic that Facebook has the same sort of growth potential as NFLX. Facebook still has a highly profitable business but its core product is shifting and that is the big concern.
My trading lately has slowed quite a bit as the market action has been just too random and choppy for me to build positions. I'm doing more flipping and my stops are taking me out of a fair number of positions.
One of my top positions right now is Intelsat (I) which could be a big winner in the 5G spectrum area. I continue to look for additional entry points.
The underlying strength in small caps is giving the action a positive tone. Much of the business media will stay focused on Facebook but if you are looking for some strength then look at the secondary stocks. I'll be adding to my position if the IWM holds up into the close.
(Facebook is a holding in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells FB? Learn more now.)
