I discussed in my previous post that I'm shifting to a more bearish bias. The timing of that comment was quite good, but the great challenge of this market isn't catching a quick pullback but catching a more severe correction. This market consistently shrugs off these little bouts of selling and turns the fledgling bears into short-squeeze fodder.
One reason I believe there may be a little more opportunity to the downside right now is that earnings season is coming to an end just as we enter peak vacation season on Wall Street. This is going to be a very slow market until Labor Day. We all know we aren't supposed to short a dull market, but the churning suggests that there may be an appetite for some selling.
The close today will be of particular interest. A weak finish has been very rare. In fact, we have not closed near the lows of the day since way back in June. Even when we have had negative action, we still seem to manage some late buying to prevent any real damage. If that changes, it will be a notable shift in market character.
One stock on my radar right now is TPI Composites (TPIC) , a recent Stock of the Week. TPIC reports earnings tonight and is likely to have initial coverage from underwriters soon. I'm generally not inclined to hold positions into earnings reports, but the first report as a publicly traded company probably has a greater chance of being on the positive side.
TPIC is engaged in manufacturing the blades used on wind turbines. Wind power is supposedly taking market share from solar and the weakness in solar today seems supportive of that thesis. I'll be holding some TPIC into the report tonight, but I'm not sure yet of the size I'm willing to risk.
