Some of the doom and gloom has lifted this morning as market players are focusing more on positive news. It doesn't hurt that the bears were out in full force this weekend, giving each other high fives and celebrating their belief that this never-ending bull market is finally struggling.
One good sign from a price action standpoint this morning is that the opening gap was not sold. There was a good amount of flipping into the strength but it was digested well and the buyers were able to push things higher about 30 minutes after the open.
IBM (IBM) , which is a big component of the DJIA, is trading better after the initial gap down. It is down about 1.5% but well off the early lows. There seemed to be universal believe among pundits that they were overpaying for Red Hat (RHT) but market players are not so confident that is the case.
One positive sign this morning is that breadth is quite robust at better than 3 to 1 positive. Small caps are showing good relative strength and there are very few new 12-month highs or lows. This is an indication that there is greater focus now on stock picking, and with many smaller stocks still waiting to report earnings, there is some interesting speculation taking place.
The bears are convinced that bounces are not going to hold in this market now, but the nature of bounces in poor markets is that they go longer than anticipated and will convince people that maybe a bottom has formed.
I'm simply focusing on individual stocks at this point and am not too concerned about the macro picture. Stock picking is the way to make money right now. My Stock of the Week is ENDRA Life Sciences (NDRA) as I wrote on sharkinvesting.com this morning:
"NDRA is developing diagnostic tools to be used in identifying fatty liver disease which is known by the abbreviation NASH.
NDRA is developing a technology similar to ultrasound that allows for diagnosis in a much more cost-effective way and in a more timely fashion. Since it is small and lightweight, it can be used to provide immediate feedback.
NDRA owns 39 patents that are mostly focused in this area and is in a strategic partnership with GE (GE) which is the leader in ultrasound.
Technically, the stock has seen a surge in volume and price recently as market players are anticipating further developments with the NDRA device. Given the huge size of the market and the need for a cheaper diagnostic tool, we believe NDRA has more upside.