A big jump on IBM Corp.'s (IBM) earnings report is adding about 90 points to the Dow Jones Industrial Average this morning, but the broader market is seeing some reversals as it tries to work off overbought technical conditions.
Breadth is solid with about 3,700 gainers to 2,700 decliners, but the number of stocks hitting new 12-month highs has narrowed to around 300. IBM is helping the technology sector in general, but it is not a stock that has been a leader in a very long time. The price action is attracting momentum chasers but it isn't spilling over to a great degree.
The pattern lately has been that these pullbacks after a good open are quickly bought and we end up with a strong close. As I commented several times last week, it is going to take a very poor close near the lows of the day to shift market sentiment. At present, most of the bears are afraid to press the short side because of the consistent closing strength.
I'm hunting for stocks that are setting up for runs into coming earnings. One example on my screen is Sarepta Therapeutics (SRPT) , which reports next week. The stock broke out of a trading range over $52 this morning but reversed as the broader market faded. I believe it is still in good shape for some optimistic positioning into the earnings news.
It would be quite helpful for stock pickers if this market pulled back, but you simply can't underestimate the tenacity of the dip buyers. They are showing no signs of stepping aside, but when they do and we have an ugly close it is going to be a welcome change for those of us that are rooting for increased volatility.