The main theme of the market recently has been mixed with slightly positive action in the indices, but pockets of weakness remain under the surface. Stock picking has become more difficult as follow-through is mixed as the market still refuses to embrace a negative narrative. There is steady underlying support but limited upside momentum.
That theme is continuing today. The indices are showing small losses and breadth is running about 3 to 4 negative. There are around 150 new 12-month highs to around 130 new lows which is a good illustration of the lack of energy. Sellers aren't rushing for the exits but they aren't showing much interest in buying right now.
There are some markets that just don't offer much opportunity and that is what we have now. There is nothing overtly negative but there just aren't many workable setups. There isn't enough strength to reward momentum chasers and there isn't enough weakness to entice dip buyers. When there is movement it doesn't tend to be sustained for very long.
My game plan is to identify a few names I like on lower volume fades to areas of support. Three names that I am watching are HTG Molecular (HTGM) , Zogenix (ZGNX) and Amyris (AMRS) . All three have good stories but they are suffering from a lack of interest in this dull market. I expect them to attract more attention to the end of the year but they are unlikely to make big moves in the short term, so they require patience.
Speaking of stocks that will require patience, Tyson Foods (TSN) is in the headlines today after it appointed a new CEO and reaffirmed its fiscal 2018 guidance of $5.70 to $6.00.
Tyson sells with a trailing PE of 11 and is looking at EPS growth of 11% for the fiscal year that ends in September 2018 and then growth of just 2% in the September 2019 fiscal year.
Those numbers just aren't going to attract either growth or value buyers and that is reflected in the chart which is quite poor. The stock bounced off recent lows following a poor earnings report but it has been struggling with overhead resistance and is unable to generate any momentum.
The clear message of Tyson, technically and fundamentally, is there are better places for your capital.