One of the major themes in the stock market recently has been rotation. Quite often it is invisible if you are looking only at the major equity indices but there are times -- like Wednesday -- when the rotation is much more evident.
What is readily apparent Wednesday is that the Dow Jones Industrial Average is up around 0.7% while the Nasdaq 100 ETF (QQQ) is down about 0.3%. This is primarily a function of money rotating out of large-cap technology names such as Apple (AAPL) and Amazon (AMZN) and into big financials like Bank of America (BAC) and oil names like Exxon Mobil (XOM) .
Overall breadth is about even and there are a few more new highs than new lows. The small-cap indices are the main laggards with the Russell 2000 ETF IWM down 0.5% but the pockets of speculation in cannabis stocks and some of the small oils and precious metals is giving the trading a positive tone.
Since the business media tend to focus primarily on the DJIA the news reporting has a positive spin to it. The "market" is up based on the DJIA and therefore everything must be great.
While the action certainly isn't bad, it is not that great either. It is a continuation of the recently lumpy action. Still, there are still plenty of bright spots for stock pickers.
The bears suggest that this action is an indication that a turn is coming. The crazy speculation in Tilray (TLRY) , the lack of fear about tariffs, the complacent attitude of many bears. The 'top is forming' argument practically writes itself.
However, if you haven't learned by now the problem is that none of these negative indications are very good timing devices. The only timing device that works is price action and that is still positive.
I've caught some good trades the last couple days such as New Age Beverages (NBEV) , which is now up 66% Wednesday alone. I'm booking some gains and making sure I keep accounts at highs.
I have no interest at all in the bears that tell us that "all the ingredients for a market drop are in place." When the action in the market shifts then I will shift my approach and not a minute sooner. There are no other practical warning signs.