The first pullback after a five-day run is usually going to attract quick dip-buying. A straight-up move like that creates a large supply of folks frustrated that they missed out, which makes them buy more aggressively when the market finally does pull back a bit. The bounce isn't gaining much momentum so far, but the indices are off the lows and breadth has improved.
It is a summer Friday and the bulls have enjoyed a good week, so it shouldn't be a big surprise if things drift around today. In fact, some backing and filling would be very healthy. It also wouldn't hurt if the positive sentiment were tempered a bit. An awful lot of fearless bulls celebrated the market yesterday, and that is seldom a good sign.
I sold down my Direxion Daily Small Cap Bear 3X Shares (TZA) position from earlier in the week for a small gain. I'm probably premature on that but there is too much potential for European Central Bank action soon and I don't want the risk.
In individual names, Mylan (MYL) is a slow mover but has a nice-looking cup-and-handle setup. I'm also tracking Performant Financial (PFMT), which debuted today and is attracting attention from the hot money.
So far, it's just a day of healthy profit-taking and there doesn't seem to be any reason to read much into it.