The DJIA has gone ballistic today and has completely recouped the losses over the past week. However, the rest of the market is having a hard time keeping pace with the big cap index and plenty of traders are grumbling about relative underperformance. The Nasdaq 100 (QQQ) , which is a rough proxy for the FAANG names, is only up about half of what the DJIA is up.
Nonetheless it is a powerful day with exceptional breadth of about 5500 gainers to 1500 decliners. Yesterday it was a sea of red and today it is an ocean of green.
This sort of quick shift causes plenty of poor positioning. Those that took steps to prepare for the possibility of downside follow through yesterday are now scrambling to find some long exposure so they can keep pace. There is no easy way to do that when there are shifts of this magnitude in such a short time period.
The big question now is whether the bulls can build on their big day. Obviously the bears were a dismal failure at producing downside momentum but that has been a common theme for years. The bulls have not been able to surpass the January highs in the S&P 500, which is a pretty long stretch but they are good at creating support.
The other day there was some talk about a double top forming in the S&P 500. The problem with 'potential' double tops is that they can easily turn into very bullish cup-and-handle patterns. If the S&P 500 surpasses the 2863 level that pattern will trigger and you can be sure technical buyers will be looking to pursue it.
Unfortunately the market has not done a good job of building on days like this lately. I sense that the 'fear of missing out' isn't as profound as it was previously. There are skeptics and with issues like Turkey and trade still simmering, the excuse for selling into strength are quite loud.
I've been a net seller into strength today. I mentioned a few names recently that I was buying on dips and do some flips. I'm not feeling that it is necessary to chase in order to build up more long exposure.
One interesting name on my screens today is PetIQ (PETQ) . The company announced a great quarter on Tuesday night and gapped up big on Wednesday. In a normal market it probably would have been chased higher but it ended up closing at lows. I didn't expect the market to blast higher today but that weak finish on such a good report due to market conditions made for a good technical entry this morning as I discuss in my Shark Technical Alert. I'll be looking to build that PETQ position further as it develops.