Overall market action is quite weak again with breadth running around 2050 gainers to 4400 decliners. There are over 150 new 12-month lows to less than 20 new highs.
What is most interesting about the action is why the vast major of big cap names are moribund, while there is some very aggressive action in a small group of lower priced stocks, most of which have very questionable fundamentals at best. For example, Yulong Eco-Materials (YECO) , which acquired a large sapphire gem stone and is now exhibiting it, has run up nearly 10-fold in two days. There are other names like this such as JMU Ltd (JMU) and China Ceramics (CCCL) also that are 'in play'.
I suspect that this very crazy speculative action is primarily caused by the fact that there is so little else that is working. Traders are bored so they are playing with the penny stocks that are making big, fast moves. They obviously are very short term trades but since there are so few swing trades it is good entertainment.
Speaking of swing trades, the pot stocks look like they could set up again as the obvious 'sell the news' trade will come to an end. Some of the more interesting charts are New Age Beverages (NBEV) , Cronos Group (CRON) and Canopy Growth (CGC) .
I'm also looking for some oversold bounces in longer term favorites. Amyris (AMRS) which is launching a low-calorie sweetener derived from sugar cane soon, is coming off support and challenging overhead.
There are a few minor pockets of interest but most of the market is looking much like Microsoft (MSFT) this morning. Microsoft will announce its earnings on October 24 after the market closes and is expected to earn $0.96 per share. The company will likely put up okay numbers again but the bigger issue right now is whether the market will care.
Microsoft trades with a trailing PE of 29 and is growing its earnings at around 12%-15% year over year. That isn't particular cheap but it isn't bad for a consistent big cap that is a safe haven for those that want to park some cash. MSFT is never going to be a big time growth stock again but in an up-trending market it is isn't a bad choice. The problem is that we are not in an up-trending market right now and the market isn't rewarding earnings reports either. The action in Netflix (NFLX) , which had a good report, is a problem for those interested in a big cap name like MSFT.