We start the week with some classic "buy the dip" action. After a gap-down open and some growling from the bears about weakness in Japan and issues with bonds, the dip buyers jumped in and took the indices straight up into positive territory.
Small-caps are lagging and breadth is negative, but the computer algorithms are very impressive. They are moving the big-cap names that count, and that keeps headlines and sentiment positive. The FANG names are mostly green, and that is what matters the most.
This narrow action isn't very healthy, but it does keep the mood positive and that helps to produce pockets of momentum that keep traders happy. There is just no way to know how much longer it can continue.
I'm staying focused on stock picking. My Stock of the Week is the company known as China's Craig List, 58.com (WUBA) . The company reported very solid earnings Monday morning and is coming out of a long trading range. Other China names like Alibaba (BABA) and Qudian (QD) are seeing some "sell the news" action, but I'm watching for entries on weakness.
I'm also having some luck with biotechnology names like OncoSec Medical (ONCS) and Aimmune Therapeutics (AIMT) . The biotech indices such as the Direxion Biotecch Bull 3X (LABU) are weak, but selectivity is working.
There is a good amount of choppiness, but what this market needs is some weakness to set things up for a year-end run.
The big bounce off the opening lows is slowing, and we'll see how strong support is now.