Yesterday's frenzied buying has ended and some profit taking is now kicking in. It is the prudent move to take some gains in the small-caps, which are making big moves, but don't mistake some repositioning as a market top.
There are a number of dynamics at work right now, as the third quarter ends tomorrow and earnings season starts shortly thereafter. While September has a historic record as being the weakest month of the year, October has historically been the most volatile. October is the month of crashes, as well as the end of bear markets.
The historic tendency toward weakness did not work in September, but hopes are high among traders that volatility might finally pick up in October. Unfortunately for the bears, a pickup in volatility tends to favor more upside than downside.
Like most traders, I don't particularly care what direction the market moves as long as there is some movement. Earnings season should help stir things up, but the computer algorithms seem determined to keep volatility suppressed.
I'm a net seller this morning as I lock in gains in some of the stocks that jumped nicely yesterday. I'm a buyer as new setup develops, but that might take a day or two. One name on my radar for an addition is Jupai Holdings Limited (JP) , a China-based asset manager, which has pulled back to support around $12.00. Another name I'm watching for an entry point is Nutanix, Inc (NTNX) , which is falling back into a long base around the $22 area.