There Is Very Little Emotion Out There

 | Oct 17, 2017 | 11:00 AM EDT
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Once again, we have quiet, but positive market action. European indices have been trading around flat overnight and, according to Eric Scott Hunsader, S&P 500 futures had the fewest number of trades between 9.30-10 am ET so far this year. Overnight futures trading is setting records for the narrowest range ever.

The indices are close to even, and breadth is running negative. Biotechnology is bouncing back from some weakness and the FAANG names are showing relative strength, but there is very little emotion out there. When there is early selling, it almost always leads to a bounce in the afternoon.

I continue to see quite a bit of speculative action in China names. Some of the bigger caps were moving strongly on Monday, but on Tuesday junk names are attracting interest. Stocks such as Xunlei (XNET) , China Rapid Finance (XRF) and SORL Auto Parts (SORL) are on the radar.

The major earnings plays aren't moving much either. Goldman Sachs (GS) is down despite announcing a big buyback, and Netflix (NFLX) is down slightly on its news.

Netflix missed its estimates slightly, used over $400 million in the quarter, and continues to pile up new debt, but it had more subscribers than expected, and that is always the key there. It is much like Amazon (AMZN) in the early days, when the only thing that mattered was growth. It is easy to find financial reasons to question NFLX, but it is the sort of stock that you have to think will work over the long term.

A little more selling is kicking in as I write, and it continues to be difficult to put new cash to work. My technical buy for today was Overstock (OSTK) , which is now seen as a blockchain play. I also reestablished a position in Abeona Therapeutics (ABEO) , which priced a secondary today at $16.


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