Pessimism hasn't been a very good trading approach in this market for a quite a while. We have another good illustration of that fact today as the worries about Deutsche Bank (DB) that were building have suddenly been shunted aside.
Various defenses from the DB CEO and others have had no impact on the stock, but this morning there was talk that DB may be able to settle a lawsuit with the Department of Justice for $5.4 billion rather than the $14 billion that was initially discussed. That turned the market and we have been trending upward on exceptionally strong breadth of almost 3-to-1 positive.
The news is also making it easier for window dressers to march a number of stocks back up so they can post better numbers for the third quarter. Thinner small-caps in particular are benefiting from this action.
Biotechnology, semiconductors and oil-related names are leading to the upside today. Fairmount Santrol (FMSA) and Resolute (REN) are a couple of oils that are doing well. Cypress Semiconductor (CY) , a recent stock of the week, is chugging along and on the biotech screen we have Sarepta (SRPT) , Aratana (PETX) , Trillium (TRIL) and Array (ARRY) .
One of my favorite biotech names for a while has been Global Blood Therapeutics (GBT) . The stock received initial coverage today from Wells Fargo and was given a whooping target of $75-$81 because of the potential for treatment of sickle cell disease. The stock is up nicely today and I'm looking for additional entries.
This market has been very good at making folks feel foolish if they play defense at the first sign of trouble. It made sense yesterday to worry at least a little bit about Deutsche Bank but today it is as if nothing had happened.
The indices are still in a trading range and there is a chance that the Deutsche Bank drama isn't over, but the bulls seem to be wearing Teflon armor. The bears' day will eventual come, but it has been delayed again.