It's Nice to See Some Speculative Fervor for a Change

 | Nov 16, 2016 | 11:10 AM EST
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Stock quotes in this article:

drys

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glbs

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dcix

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twlo

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nvda

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oclr

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amd

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hdsn

We had a few signs of reversal action yesterday and there are a few more today. Breadth is running about 2,300 gainers to 3,800 losers, but so far small-cap indices are holding up well. The Nasdaq 100 names are now leading while the Dow Jones Industrial Average and S&P 500 lag. It isn't much of a reversal given the size of the recent divergences, but it is starting to unwind to some degree.

I hope that as the whiplash of sector trades starts to calm down we will have more focus on individual stock picking. Although the action in bulk shippers such as DryShips (DRYS) , Globus Maritime (GLBS) and Diana Containership (DCIX) is downright ridiculous, it is nice to see this sort of speculative fervor. It has been a long time since we have had a sector explode upward in this manner. A number of years ago we had very aggressive action in rare earth minerals, solar energy and small oils, but it was quite tame compared to what we are seeing in shippers now.

Speculative action of this sort doesn't occur unless there is a high level of confidence, and that bodes well for traders. Traders are already looking for the next group to chase, and the period around Thanksgiving can be quite conducive to that sort of trading.

My Stock of the Week, Twilio (TWLO) , continues to act well, and I've started building my position in NVIDIA (NVDA) , which I initiated after the gap-up on earnings last week. The action there suggests institutions are looking to build their NVDA holdings.

Oclaro (OCLR) has moved through resistance at $9 and I'm keeping my eye on another semiconductor play, Advanced Micro Devices (AMD) , which trades a ton of shares but is approaching key resistance at $7.50. Hudson Technologies (HDSN) , the environmental play on refrigerants I discussed previously, continues to move higher.

The indices are acting quite well overall and if the shift to stock picking continues we will be in good shape going into Thanksgiving.

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