There Are Good Opportunities in Stock Picking

The indices may need a rest, but stock-pickers have an edge.

We are off to a rocky start Thursday morning, as oversold conditions combined with some negative news flow about Chinese economic growth, Korea and a few other things are giving the bears some traction. The bulls have showed up on the first dip, but breadth is poor and momentum has slowed quite a bit.

After a strong three-day move, it isn't too surprising that the overbought conditions finally matter a bit but, as I've mentioned several times this week, markets like this tend to stay sticky to the upside.

There are still plenty of potential dip buyers that have not had a chance to do their thing yet, and that assures that the market is not just going to suddenly collapse. If you are looking for a short entry, you better be patient and be willing to average in slowly.

I'm focusing on individual stock-picking here, rather than trying to call market direction. One of my favorites right now is Ultra Clean Holdings (UCTT) , which has a nice looking chart and is making a run at recent highs around $26. The company is looking at EPS growing 263% in 2017 to $2.29 and trades with a trailing PE of 15.

Another position making a move out of a base today is Phoenix New Media (FENG) . This is a small-cap China play that has formed a flag pattern and is now busting to new highs on good volume.

I am also watching Halozyme Therapeutics (HALO) , which gapped higher following news that it is collaborating with Bristol-Myer (BMY) . I think this one could make a sustained move, and I'm building a position starting this morning.

The indices may need a rest at this point, but there is still good opportunity in stock picking.

At the time of publication, Rev Shark was long UCIT, HALO, FENG, although positions may change at any time. Please note that due to factors including low market capitalization and/or insufficient public float, we consider FENG to be a small-cap stock. You should be aware that such stocks are subject to more risk than stocks of larger companies, including greater volatility, lower liquidity and less publicly available information, and that postings such as this one can have an effect on their stock prices.