There is a little red on the screens today, but it is so minor it hardly qualifies as a pullback. Breadth is poor, with about 2000 advancers to nearly 4500 decliners, but there isn't a big rush for the indices. The FAANG names are showing some relative strength while small-caps are lagging a little.
For many market players, it is refreshing to finally see a little softness. It is tough to do much when there is no natural ebb and flow to the action. It has been one way, and there has been no choice but to chase extended charts if you want in. Now that we have a little softness, the charts will be able to develop into some better patterns.
It has been a great run for many stocks and there are many folks convinced that there is still much more potential upside. They may be right, but I find that after a move like we've had, it pays to tighten up stops and to err on the side of selling until things reset. There is no need to be bearish or bullish. You just have to recognize that stocks need to reset after a sizable run. It is tough to time when that might occur, but if you use trailing stops, then you don't have to guess.
Too often traders try to time the market by studying the charts of the indices. They would be better off if they just focused on the stocks that they own and let the action there determine market exposure. You don't have to worry about making big market calls if you employ stops in a logical fashion.
In recent weeks, my long exposure has declined steadily as I lock in gains as various positions become extended or pull back. My inability to find new entry points assures that I maintain a high level of cash. The market timing isn't even a conscious decision.
I've been a net seller so far today, but I have added to a position in Himax Technologies (HIMX) . Old favorite, The Trade Desk (TTD) , is breaking out -- but it's a good example of how hard it can be to find new entry points in a market that is extended.