Throughout the recent trading range, the pattern of action has been morning weakness followed by afternoon strength. The bears become excited when we struggle out of the gate, but the dip buyers show up and we end up with a good close. Neither side has been able to gain sufficient momentum for a clear breakout of the range, but the bulls have maintained an edge.
This morning, the bears are putting forth a bit more effort. Recent S&P 500 support around 2159 is being tested -- and the dip buyers haven't given it a try. Breadth is running about the same as yesterday, with 2500 gainers to 3700 losers, but we don't have the big-cap technology names or the strength in biotechnology to help the cause.
Precious metals are leading, which is probably not a good sign for the bulls that are hoping for a breakout in the indices. Also, some of the super-momentum names that I've discussed quite often, like Yirendai (YRD) and Acacia Communications (ACIA) , are seeing reversals. They have need some profit taking, but momentum can cut both ways and increased caution is warranted.
I've been a net seller so far this morning, but gold is interesting and I'm liking DRDGOLD (DRD) again. Shark technical buy Xactly Corp (XTLY) is acting well, and I'm looking to add to my stock of the week, TPI Composites (TPIC) , on weakness.
The key today is whether the buyers show up in the afternoon again. If they don't, and we close weak, the bears are going to be very anxious to press their bets.